' 


THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


0    V. 


THE      LAW      OF      INSURANCE 


A  TREATISE 


ON  THE 


LAW  OF  INSURANCE 


INCLUDING 


FIRE,  LIFE,  ACCIDENT,  CASUALTY,   TITLE,  CREDIT 

AND  GUARANTY  INSURANCE 

IN  EVERY  FORM 


BY 

CHARLES  B.  ELLIOTT,  PH.  D.,  LL  D., 

Ol 

Judge  of  the  District  Court  of  Minnesota 
Author  of  "  Public  Corporations  "  and    "  Private  Corporations  " 


INDIANAPOLIS 

THE  BOWEN-MERRILL  COMPANY 
1902 


COPYRIGHT  1902 

BY 
CHARLES  B.  ELLIOTT 


T 


THE   HOLLENBECK    PRE33 
INDIANAPOLIS 


TABLE  OF  CONTENTS. 


PART  I. 

OF  THE  CONTRACT  OF  INSURANCE,  AND  THE  PRIN- 
CIPLES BY  WHICH  IT  IS  GOVERNED. 


CHAPTER  I. 

INTRODUCTORY. 

SECTION  PAGE 

1.  Sources  of  the  law  of  insurance 1 

2.  Insurance  in  Roman  law 4 

3.  Its  development  on  the  Continent 7 

4.  Its  growth  in  England 7 

5.  Growth  of  insurance  other  than  marine. .  11 


CHAPTER  II. 

DEFINITION,    NATURE    OF    CONTRACT,   AND    MANNER   OF    MAKING. 

SECTION  PAGE 

6.  Definition  14 

7.  Different  kinds  of  insurance 15 

8.  What  constitutes  insurance 16 

9.  Reinsurance 18 

10.  Parties 19 

11.  The  insured 20 

12.  The  insurer — Foreign  corporations — State  control 21 

13.  Mutual  companies  and  benevolent  societies 22 

14.  The  risk 24 

15.  A  personal  contract 26 

16-.     A  conditional  contract 26 

17.  An  aleatory  contract 27 

18.  Indemnity    27 

19.  Life  insurance  not  a  contract  of  indemnity 27 

20.  Indemnity  in  accident  insurance 29 

21.  Subrogation  29 


729438 


iv  CONTENTS. 

SECTION  PAGE 

22.  Loss  caused  by  negligence 29 

23.  Form  of  the  contract 30 

24.  Statutory  form — Conditions  implied  in  oral  contract 31 

25.  Statute  of  frauds 32 

26.  Renewal  by  parol 32 

27.  Effect  of  charter  provisions 32 

28.  Revenue  stamps 33 

29.  Enforcement  of  oral  contract 34 

30.  Kinds  of  policies 34 

31.  Completion  of  contract — Delivery  of  the  policy 35 

32.  Countersigning  by  agent 36 

33.  Contracts  made  by  correspondence 36 


PART  II. 

OF  THE  SUBJECT-MATTER  OF  INSURANCE  AND  THE 

INTEREST  NECESSARY  TO  SUPPORT 

THE  CONTRACT. 

CHAPTER  III. 

INSURABLE   INTEREST   IN   PROPERTY. 
SECTION  PAGE 

40.  The  subject-matter  38 

41.  Insurable  interest  38 

42.  Definition  40 

43.  Nature  of  insurable  interest 40 

44.  Different  interests 41 

45.  Time  of  interest 41 

46.  Continuity  of  interest 42 

47.  Nature  of  interest 43 

48.  Illustrations 45 

CHAPTER  IT. 

INSURABLE  INTEREST  IN  LIVES. 
SECTION  PAGE 

55.  The  rule  at  common  law 50 

56.  The  English  statute — Not  in  force  in  this  country 51 

57.  The  modern  rule 52 

58.  The  amount  of  a  creditor's  insurable  interest 53 

59.  Mere  form  disregarded 54 


CONTEXTS.  V 

SECTION  PAGE 

60.  Continuance  of  interest  in  life 55 

61.  Interest  of  beneficiary  designated  by  insured 56 

62.  Interest  of  the  assignee 57 

63.  Interest  of  the  assignee,  continued 59 

64.  Interest  based  upon  relationship 61 

65.  Interest  based  upon  relationship,  continued 63 

66.  Illustrations  of  insurable  interest  in  life 64 

67.  Right  of  assignee  without  interest  to  recover  premiums  paid ....  67 

68.  Want  of  interest  as  a  defense  under  incontestable  clause 69 

70.     Description  of  interest 70 


PART  III. 

OF  MATTERS   THAT   RENDER   THE   CONTRACT  VOID 
OR  UNAVAILABLE. 

CHAPTER  V. 

NON-DISCLOSURE    OF    MATERIAL    FACTS. 
SECTION  PAGE 

78.  In  general   71 

79.  Duty  of  applicant 72 

80.  Concealment — Definition   72 

81.  Rule  as  affected  by  the  character  of  the  insurance 72 

82.  Modern  rule  in  the  United  States 74 

83.  What  must  be  communicated 75 

84.  Where  specific  inquiries  are  made 76 

85.  Basis  of  the  rule 77 

86.  Where  no  written  application  is  made 78 

87.  Incomplete  answers  to  inquiries 79 

88.  Answers  calculated  to  mislead — Irresponsive  answers 80 

89.  Time  of  concealment 80 

90.  Materiality 80 

91.  Concealment  through  inadvertence  or  negligence 81 

92.  Concealment  or  misrepresentation  by  agent 82 

93.  Knowledge  of  the  agent,  continued 83 

CHAPTER  VI. 

REPRESENTATIONS   AND    WARRANTIES. 
SECTION  PAGE 

100.  Statutory  definitions 86 

101.  Representations — Definition    87 


VI  CONTENTS. 

SECTION  PAGE 

102.  Warranties  distinguished  from  representations 87 

103.  Affirmative  and  promissory  warranties 88 

104.  Effect  of  breach  of  warranty 89 

105.  Construction  of  statements  in  the  application 90 

106.  Application  made  part  of  the  policy 90 

107.  Construction    91 

108.  Oral  representations 93 

108a.  Mistake — Good  faith  answer 93 

109.  Statement  of  expectation  or  belief 94 

110.  Affirmative   and    promissory    representations — Continuing    war- 

ranties      95 

111.  Oral  promissory  representations 96 

112.  Conclusion   98 

113.  Misrepresentation   by   agent 99 

114.  Effect  of  misrepresentation 100 

115.  Substantial  truth  required 100 

116.  Test  of  materiality 100 

117.  Materiality — Opinion   of   experts .». 101 

118.  Burden  of  proof 102 

119.  Statutory   provisions    104 

120.  The  Massachusetts  statute 105 

121.  The  Pennsylvania  statute 105 

122.  Similar  provisions  in  other  states 106 

123.  Controlling  force  of  such  statutes .  107 


PART  IV. 

OF  THE  CONSIDERATION. 

CHAPTEK  VII. 

THE   PEEMIUM. 
SECTION  PAGE 

125.  In  general 109 

/.     The  Premium  in  Ordinary  Insurance. 

126.  Nature  of  premium 110 

127.  Obligation  to  pay  premium Ill 

128.  Payment — Condition  precedent — Forfeiture 112 

129.  Manner,  time  and  place  of  payment 114 

130.  The  giving  of  a  promissory  note 115 

131.  Payment  after  loss  or  death 117 

132.  Paid-up    policies 118 

133.  Premium  notes .  118 


CONTENTS.  Vll 

SECTION  PAGE 

134.  Notice  of  time  when  premium  is  due 119 

135.  Right  to  recover  premiums  paid 121 

//.     Assessments  in  Mutual  Companies  and  Benevolent  Societies. 

136.  Dues   and    assessments 122 

137.  Liability   to   assessment 123 

138.  Effect  of  non-payment  of  assessment 123 

139.  Withdrawal   of   member 124 

140.  Insolvency  of  company 124 

141.  Death  during  period  of  suspension 125 

142.  Reinstatement    125 

143.  Waiver — Estoppel    126 


PART  V. 
AGENCY,  WAIVER  AND  ESTOPPEL. 

CHAPTER  VIII. 

INSURANCE   AGENTS    AND   THE   GENERAL   RULES    OF    AGENCY. 

SECTION  PAGE 

150.  In  general  128 

151.  Statutory  provisions  relating  to  insurance  agents 129 

152.  Construction  of  such  statutes 130 

153.  Evidence  of  agency 131 

154.  Character  of  the  agency 131 

155.  Various  special  agents 133 

156.  Subagents  and  clerks 134 

157.  Insurance  brokers  135 

158.  Powers  of  agents 137 

159.  Restrictions  in  application  or  policy 138 

160.  Limitations  on  authority  of  agent 139 

160a.  Limitations  on  authority — Continued 140 

161.  Limitations  contained  in  application — Constructive  notice 142 

162.  Preparation   of   application 143 

163.  Provisions  restricting  power  of  officers  and  general  agents 143 

164.  Notice    144 

165.  Notice  of  loss  to  local  agent 146 

166.  Rights  and  liabilities  of  agent 146 


Till  CONTENTS. 


CHAPTER  IX. 

RULES  OF  WAIVER  AND  ESTOPPEL  AS  APPLIED  TO  CONTRACTS  OF 

INSURANCE. 

SECTION  PAGE 

175.  In  general   148 

176.  Definition     148 

177.  Knowledge  and  intent 149 

178.  Basis  of  waiver 149 

179.  Effect  of  mere  silence 150 

180.  What  may  be  waived 150 

181.  Waiver   of   certain   defenses 151 

182.  Power  of  agent  to  waive 152 

183.  Waiver  by  agent — Continued 152 

184.  Prepayment  of  premium 153 

185.  Waiver  in  writing  only 154 

186.  Limitations  in  policy — Prepayment  of  premium 154 

187.  Estoppel  by  act  of  agent 156 

188.  Facts  known  to  company  when  policy  issued 157 

189.  Oral  testimony  to  show  actual  statements 161 

190.  Bad  faith — Collusion  between  applicant  and  agent 163 


PART  VI. 

THE  STANDARD  POLICY  AND  ITS  PROVISIONS. 

CHAPTER  X. 

PROVISIONS    OF    THE    STANDARD    POLICY. 
SECTION  PAGE 

200.  In  general   165 

201.  The  Massachusetts  standard  policy 165 

202.  The  New  York  standard 166 

203.  The  binding  clause 167 

204.  'Construction  of  the  standard  policy 168 

205.  Effect  of  a  breach  of  condition 170 

A.     PROVISIONS  RELATING  TO  MATTERS  BEFORE  Loss. 
/.     Formal  Part  of  Contract,  112. 

206.  Parties    172 

207.  The  premium   174 

208.  Term  of  insurance..  .   174 


CONTENTS.  IX 

SECTION  PAGE 

209.  The  amount   175 

210.  Description  of  the  property — In  general 175 

211.  Goods  held  in  trust 175 

212.  May  cover  shifting  stock 176 

213.  Ambiguous    descriptions — Reformation 176 

214.  Presumption  as  to  nature  of  business 178 

215.  Descriptions,  when  warranties 179 

216.  Description  of  merchandise — What  included  in  the  description. .  179 

217.  Description   of   buildings 183 

218.  Location   of   property — In   general 186 

219.  Location  material 187 

220.  Illustrations    190 

221.  Risks  insured  against 193 

222.  Proximate  cause — Electric  wires 197 

II.    Authorization  of  Agent,  199. 

223.  Agency    199 

777.     Application  and  Survey,  200. 

224.  Application  a  part  of  the  policy 201 

IV.    Misconduct  of  Insured  in  Procuring  Policy,  201. 

225.  Entirety  of  contract 201 

226.  Concealment   and   misrepresentation 204 

227.  Statement  of  interest 204 

228.  Fraud  and  false  swearing 204 

V.    Excluded  Risks,  206. 

229.  Invasion,  riot,  etc 207 

230.  Theft  209 

231.  Neglect  to  protect  property 210 

232.  Explosion 210 

233.  Lightning     213 

234.  Fall   of  building 213 

235.  City  ordinances  215 

VI.    Excluded  Property,  215. 

236.  Exceptions  and  limitations 215 

237.  Plate  glass,  frescoes  and  decorations 217 

ii — ELLIOTT  INS. 


X  CONTENTS. 

CHAPTEK  XI. 

PROVISIONS   OF   THE   STANDARD    POLICY,    CONTINUED. 

VII.     Provisions  Relating  to  Interest  in  and  Care  of  Property,  219. 

SECTION  PAGE 

245.  Other   insurance    219 

246.  Definition — Different   interests 221 

247.  Whether  valid  or  invalid 222 

248.  Where  the  words  "valid  or  invalid"  do  not  appear 223 

249.  Consent  of  the   company — Waiver 226 

250.  Policy  covering  a  part  of  the  property 227 

251.  Operation  of  manufacturing  establishment 229 

252.  Running  after  hours 232 

253.  Increase  of  risk 233 

254.  Changes  in  adjoining  property 236 

255.  Effect  of  increase  of  hazard 237 

256.  Repairs — Employment  of  mechanics 238 

257.  Ownership     241 

258.  Incumbrances   244 

259.  Illustrations    246 

260.  Illustrations  of  breach  of  condition 249 

261.  Building  on  leased  ground 251 

262.  Incumbrance  by  chattel  mortgage 252 

263.  Foreclosure  proceedings  255 

264.  Generation  of  illuminating  gas 258 

VIII.     Change  in  Interest,  Title  or  Possession,  258. 

265.  Scope  of  provision 259 

266.  Transfer  of  part  interest 260 

267.  Executory  contract  of  sale 261 

268.  Incumbrances   263 

269.  Defeasible  conveyances  265 

270.  Invalid  conveyances  265 

271.  Sale  with  purchase-money  mortgage 266 

272.  Conveyance  to  the  wife  of  insured 266 

273.  Transfers  by  and  between  partners 266 

274.  Transfers  between  joint  owners 269 

275.  Legal  process  or  judgment 269 

276.  By  judgment 271 

277.  By  partition    272 

278.  Assignment  and  bankruptcy  proceedings 272 

279.  Transfer  by  death 273 

280.  Change  of  possession 273 

281.  Lease  of  the  property .   274 


CONTENTS.  XI 

IX.     Assignment,  274- 
SECTION  PAGE 

282.  Assignment  of  policy 275 

X.     Prohibited  Articles,  278. 

283.  Use  of  property — Prohibited  articles 279 

284.  Prohibited   articles — Continued    283 

285.  Exception  in  favor  of  kerosene  oil 284 

XL     Vacancy,  285. 

286.  In  general   285 

287.  Construction    286 

288.  "Vacant"  and  "unoccupied"  not  synonymous 287 

289.  Construction  when  applied  to  dwelling  house 288 

290.  Building — Contents — Vacancy    290 

291.  Illustrations  of  construction  of  this  provision 291 

XII.     Authorized  Change  of  Location,  293. 

292.  In  general 293 

XIII.    Renewal  of  Contract,  298. 

293.  In  general   294 

294.  Illustrations    297 

295.  Reformation  of  the  policy 298 

XIV.     Cancellation  of  Policy,  298. 

296.  In  general   299 

297.  The  time 300 

298.  Authority  of  agent  to  cancel 300 

299.  Return  of  premium 302 

300.  What  amounts  to  a  cancellation 303 

XV.     Waiver,  805. 

301.  Limitations  upon  power  to  waive 306 

CHAPTEE  XII. 

PROVISIONS   OF   THE   STANDARD   POLICY,   CONTINUED. 

B.     PROVISIONS  EELATING  TO  MATTERS  SUBSEQUENT  TO  A  Loss. 

SECTION  PAGE 

302.  In  general  .  308 


Xii  CONTENTS. 

XVI.    Notice  and  Proof  of  Loss,  309. 
SECTION  PAGE 

303.  Definition — Compliance   309 

304.  "Immediate"  notice    311 

305.  Separation  of  goods  "forthwith" 313 

306.  Excuses  for  failure  to  furnish  proofs 314 

307.  When   a  condition   precedent 315 

308.  What  is  a  compliance  with  this  provision 317 

309.  Certificate  of  magistrate 319 

310.  Plans   and    specifications 320 

311.  Waiver    320 

312.  To  whom  notice  must  be  given 322 

XVII.     Exhibition  of  Property  and  Records — Examination  of 

Party,  823. 

313.  Examination  of  party   324 

314.  Failure  to  produce  books 326 

315.  The  iron  safe  clause 327 

XVIII.  Arbitration  of  the  Amount  of  Loss,  330. 

316.  Disagreement    331 

317.  Validity  of  provision 332 

318.  Where  there  is  a  total  loss 334 

319.  Demand  for  arbitration 335 

320.  Condition  precedent  338 

321.  Revocation  342 

322.  Invalidity  of  the  award 342 

323.  Waiver    347 

324.  Second  arbitration — Resnbmission    348 

325.  Demand  for  arbitration  as  admission  of  liability 352 

326.  Right  of  mortgagee 353 

XIX.  Right  to  Repair,  Rebuild,  or  Replace,  353. 

327.  An  option  reserved 354 

XX.     Time  Within  Which  Loss  is  Payable,  357. 

328.  In  general  358 

XXL     Time  of  Bringing  Suit,  359. 

329.  Validity    359 

330.  Time  when  limitation  begins  to  run 360 


CONTENTS.  Xlll 

CHAPTER  XIII. 

CERTAIN    GENERAL    PROVISIONS    OF    THE    STANDARD   POLICY. 

XXII.     Measure  of  Damages,  362. 
SECTION  PAGE 

332.  In  general  363 

333.  Valued  policy  legislation 363 

334.  Constitutionality  of  valued  policy  laws 365 

335.  Meaning  of  total  loss 366 

336.  Total  loss  to  frame  building  within  fire  limits 368 

337.  Amount  of  recovery — Illustrations 369 

XXIII.     Prorating  Loss  with  Other  Insurers.,  §70. 

338.  The  pro  rata  clause 371 

XXIV.  Subrogation,  372. 

339.  The   general   principle 373 

XXV.  Reinsurance,  876. 

340.  The  reinsurance  contract 376 

XXVI.     Conditions  Affecting  Mortgagees,  378. 

341.  Special  provisions  378 

XXVII.     Construction  of  Terms — Mutual  Companies,  381. 

342.  In  general  381 

XXVIII.     Indorsement  of  Other  Conditions,  381. 


PART  VII. 

LIFE,  ACCIDENT,  AND  INDEMNITY  INSURANCE. 

CHAPTER  XIV. 

STIPULATIONS   OF   LIFE   INSURANCE   POLICY. 

SECTION  PAGE 

350.    General  statement  .  .382 


XIV  CONTENTS. 

/.     Formal  Part  of  Contract,  883. 
SECTION  PAGE 

351.  Parties 383 

352.  The  beneficiary — Manner  of  designation — Right  to  fund 383 

353.  Transmission  of  interest  of  beneficiary 387 

354.  Rights  of  beneficiary    389 

355.  Reservation  of  a  right  to  change  beneficiary 391 

356.  Manner  of  changing  beneficiary 394 

357.  Right  to  proceeds — Bankruptcy 395 

II.    Payment  of  Premium  a  Condition  Precedent,  395. 

358.  Payment  of  premium — Illustrations 396 

359.  Time  when  premium  is  due — Construction  by  agent — Estoppel . .  399 

///.     Powers  of  Agent,  401. 

360.  Agents    401 

IV.    Statement  of  Age,  402. 

361.  Age    402 

V.  Assignment  of  Policy,  403. 

362.  Assignability    403 

363.  Notice  to  company 405 

364.  Manner  of  making  assignment 407 

365.  Assignment  of  policy  by  assignee 408 

VI.  Incontestable  Clause,  409. 

366.  Incontestable    409 

VII.     Special  Privileges,  411- 

367.  Special  privileges  411 

VIII.     Application  a  Part  of  Contract,  411- 

367a.  Provisions  in  the  application 411 

(a)     Excepted  Risks,  411. 

368.  Suicide — Sane  or  insane 412 

369.  Where  there  is  no  provision  as  to  the  effect  of  suicide 413 

370.  Suicide — Construction    414 

371.  Presumption — Burden  of  proof    416 

372.  Residence  and  occupation 417 

373.  Death  in  violation  of  law  or  at  the  hands  of  justice 418 


CONTENTS.  XV 

(b)     Statements  with  Reference  to  Habits,  Physical  Condition, 

etc.,  420. 
SECTION  PAGE 

374.  Habits  420 

375.  Health  and  freedom  from  disease 421 

376.  Bodily   injuries    424 

377.  Medical  attendance  424 

378.  Family  relationship   425 

379.  Other   insurance    426 

380.  Rejection  of  former  application 427 


CHAPTEE  XV. 

ACCIDENT   INSURANCE. 

SECTION  PAGE 

390.  In  general   429 

391.  Definition  of  accident 429 

I.     Construction  of  Provisions  of  Policy. 

392.  External,  violent,  or  accidental  injuries 430 

393.  Risks  of  travel 432 

394.  Inhaling  gas — Poison  433 

395.  Occupation  or  employment 435 

396.  External  signs  436 


II.    Excepted  Risks. 

397.  Effect  of  negligence 437 

398.  Voluntary  exposure  to  unnecessary  dangers 437 

399.  Bodily  infirmity  or  disease 440 

400.  Injuries  intentionally  inflicted  by  others 441 

401.  Injuries  received  while  engaged  in  violation  of  law 443 

402.  Injuries  received  while  intoxicated * 446 


III.     General  Provisions. 

403.  Amount  of  recovery — Disability 447 

404.  Construction — Effect  of  existing  judicial  decisions 449 


XVi  CONTENTS. 

CHAPTER  XVI. 
EMPLOYERS'  LIABILITY,  GUARANTY,  AND  TITLE  INSURANCE. 

7.    Employers'  Liability  Insurance. 
SECTION  PAGE 

410.  In  general  451 

411.  Injuries  while  engaged  in  designated  business 452 

412.  Violation  of  statute  by  insured 454 

413.  When  liability  accrues 455 

414.  Effect  of  judgment  against  insured 457 

415.  Notice  of  injury  or  claim 458 

II.     Fidelity  Insurance. 

416.  In  general  459 

417.  Manner  of  proof  462 

418.  Constructive  notice    463 

419.  Supervision  of  employe 463 

777.     Credit  Insurance. 

420.  In  general  465 

421.  Construction  of  policy — Amount  of  recovery 466 

422.  Identity  of  the  insured 469 

IV.     Title  Insurance. 

423.  Insurance  of  titles — Construction .  469 


TABLE  OF  CASES. 


[.References  are  to  Pages.] 


Abbott  v.  Hampden,  etc.,  Ins. 

Co.,  49,  253 

Accident  Ins.  Co.  v.  Bennett, 

417,  442,  445 

v.  Crandall,  93,  415 

Adair  v.  Southern,  etc.,  Ins.  Co.,  234 
Adams  v.  Lindsell,  37 

v.  Manufacturers',    etc.,    Ins. 

Co.,  300 

v.  New  York,  etc.,  Ins.  Co.,        182 
v.  Reed,  66 

v.  Rockingham,  etc.,  Ins.  Co., 

265,  273 

^Etna,  etc.,  Ins.  Co.  v.  Clough,    384 
v.  Mason,  390 

v.  Olmstead,  156 

.<33tna  P.   Ins.   Co.   v.   Boon, 

207,  208,  209 

v.  Davis,  332,  347 

v.   Tyler,  43,   221,   242 

..Etna  Ins.  Co.  v.  Grube,          87,  88 
v.  Jackson,  181 

v.  Maguire,  302 

v.  Meyers,  171,  286 

v.  Shryer,  134 

v.   Simmons,  324,   325,   348 

,<Etna  L.  Ins.  Co.  v.  Florida,        412 
v.  France,  66,  89,  403 

Agricultural  Ins.  Co.  v.  Hamil- 
ton, 289 
Alabama,  etc.,  Assur.  Co.  v.  Long, 

etc.,  Co.,  140,  172,  227 

Alabama  G.  L.  Ins.  Co.  v.  Mobile 


Mut.  Ins.  Co., 
v.  Garner, 
v.  Johnston, 
Alamo  F.  Ins.  Co.  v.  Davis, 


58 

91 

87 

380 


Albert  v.  Mutual  L.  Ins.  Co.,          56 
Albion  Lead  Works  v.  Williams- 
burg,  etc.,  Ins.  Co.,      97,  236,  287 
Alexander  v.  Continental  Ins. 

Co.,  152 

v.  Parker,  66,  384 

Alkan  v.  New  Hampshire  Ins. 

Co.,  274,  276 

Allemania  F.  Ins.  Co.  v.  Peck, 

267,  273 
Allen  v.  Charlestown,  etc.,  Ins. 

Co.,  249 

v.  Chicago,  etc.,  R.  Co.,  30 

v.  German,  etc.,  Ins.  Co., 

131,  143,  200,  220 
v.  Merchants',  etc.,  Ins.  Co.,      224 
Allgeyer  v.  Louisiana,  22 

Alliance,  etc.,  Ins.  Co.  v.  Swift,    299 
Allis  v.  Ware,  389 

Allison  v.  Phoanix  Ins.  Co.,  224 

Alsop  v.  Commercial  Ins.  Co.,    34,  35 
Alston  v.  Mechanics',  etc.,  Ins. 

Co.,  97 

v.  Old  North,  etc.,  Ins.  Co.,         289 

Alvord  v.  Luckenbach,  408 

American  Ace.  Co.  v.  Reigart,     431 

v.  Carson,  441,  442,  443 

American  Gas.  Ins.  Co.'s  Case, 

294,  451 
American  Central  Ins.  Co.  v.  Mc- 

Lanathan,  306 

American,  etc.,  Indem.  Co.  v.  Car- 

rollton  Furn.  Mfg.  Co.,    464,  468 
v.  Wimpfheimer,  466 

v.  Wood,  102,  464 

American,  etc.,  Ins.  Co.  v.  Ander- 
son, 147 


(xvii) 


XV111 


TABLE   OF    CASES. 


[References 

American,  etc.,  Ins.  Co.  v.  Bass,  307 
v.  Fordyce,  456 

v.  Green,  281 

v.  Haws,  188 

v.  Heaverin,  316 

v.  Henninger,  321 

v.  Landau,  342,  344 

v.  Murphy,  367 

v.  Rothchild,  176 

v.  Simpson,  325,  326 

American  P.  Ins.  Co.  v.  Brighton, 

etc.,  Mfg.  Co.,  230,  231 

v.  Brooks,  135 

v.  Stuart,  331,  348 

American  Ins.  Co.  v.  Garrett,      119 

v.  Padfield,  289 

American  L.  Ins.  Co.  v.  Mahone, 

77,    80 
American  Security,  etc.,  Co.  v. 

Prudential  Ins.  Co.,  385 

American  Surety  Co.  v.  Pauly, 

460,  461,  462,  463 
American  Towing  Co.  v.  German 

F.  Ins.  Co.,  197 

Ames  v.  New  York,  etc.,  Ins.  Co., 

156,  359 
Amesbury  v.  Bowditch,  etc.,  Ins. 

Co.,  359 

Amicable  Society  v.  Bolland,        419 
Amick  v.  Butler,  52,  54,  56,  60 

Amory  v.  Gilman,  51 

Amsinck  v.  American  Ins.  Co.,      45 
Anchor  L.  Ins.  Co.  v.  Pease,  114 

Anderson  v.  Fitzgerald,  101 

v.  Manchester  F.  Assur.  Co., 

150,  154,  166 

v.  Miller,  375 

v.  Pacific  F.  &  M.  Ins.  Co.,          95 
Angier  v.   Western  Assur.   Co., 

29,  234 

Annely  v.  De  Saussure,  49 

Anoka  Lumber  Co.  v.  Fidelity, 

etc.,  Co.,  15,  457,  458 

Anthony  v.  Massachusetts  Ben. 

Ass'n,  406 

Appleton   Iron   Co.   v.   British 

Amer.  Assur.  Co.,  150,  172 


are  to  Pages.} 

Arff  v.  Star  F.  Ins.  Co.,  135 

Arkell  v.  Commerce  Ins.  Co.,         258 
Armour  v.  Transatlantic  F.  Ins. 

Co.,  100 

Armstrong  v.  Agricultural  Ins. 

Co.,  149 

v.  Western,  etc.,  Ins.  Co.,  167 

Arnfeld  v.  Guardian  Assur.  Co.,  301 
Arthur  v.  Palatine  Ins.  Co.,  246 

Ashenfelter  v.  Employers',  etc., 

Assur.  Corp.,  438 

Ashley  v.  Ashley,  61 

Ashworth  v.  Builders',  etc.,  Ins. 

Co.,  287,  290 

Assievedeo  v.  Cambridge,  50 

Associated  F.  Ins.  Co.  v.  Assum,   203 
Atkins  v.  Atkins,  384 

Atlantic  Ins.  Co.  v.  Goodall,          174 
Attleborough  Sav.  Bank  v.  Se- 
curity Ins.  Co.,  379 
Attorney-General  v.  Continental 

L.  Ins.  Co.,  113,  119 

Aurora,  etc.,  Ins.  Co.  v.  Kranich,  294 
Aurora  F.  Ins.  Co.  r.  Eddy,    96,  264 
v.  Johnson,  325 

Austin  v.  Drew,  194 

Ayres  v.  Hartford  F.  Ins.  Co.,        43 


B 


Babcock  v.  Montgomery,  etc.,  Ins. 

Co.,  194,  213 

Bachmeyer  v.  Mutual,  etc.,  Ass'n, 

416 

Bacon  v.  Clyne,  124 

v.    United    States.,    etc.,    Ace. 

Ass'n,  433,  441 

Badenfeld  v.  Massachusetts,  etc., 

Ace.  Ass'n,  341 

Badger  v.   American,  etc.,   Ins. 

Co.,  36 

v.  Glens  Falls  Ins.  Co.,  317 

Bailey  v.  ^tna  Ins.  Co.,  352 

Baker  v.  Home  L.  Ins.  Co.,  156 

v.  State  Ins.  Co.,  205 

v.  Westchester  F.  Ins.  Co.,         295 

Baldwin  v.  Fraternal,  etc.,  Ass'n,  348 


TABLE    OF    CASES. 


XIX 


[References  are  to  Pages.] 


Baldwin  v.  Phoenix  Ins.  Co.,        266 
v.  Provident,  etc.,  Soc.,  396 

Balestracci  v.  Firemen's  Ins.  Co.,  194 
Ballou  v.  Gile,  384 

Bangor  Sav.  Bank  v.  Niagara  F. 

Ins.  Co.,  345 

Bankers'  L.  Ins.  Co.  v.  Robbins,   129 
Barber  v.  Fire  &  M.  Ins.  Co.,        361 
v.  Fletcher,  95 

Barbour  v.  Larue,  65 

Bard  v.  Penn,  etc.,  Ins.  Co.,  220 
Barnard  v.  Lancashire  Ins.  Co., 

342,  346 
v.  National  F.  Ins.  Co., 

154,  220,  242,  244 

Barnes  v.  Fidelity,  etc.,  Ass'n,      422 
v.  Hekla  F.  Ins.  Co.,  18,  377 

v.  Union,  etc.,  Ins.  Co.,        259,  272 
Barnum  v.  Merchants'  F.  Ins.  Co., 

182,  320 

Baron  v.  Brummer,  407 

Barre  v.  Council  Bluffs  Ins.  Co.,  31 
Barry  v.  Hamburg,  etc.,  Ins.  Co., 

263,  265 
Bartholomew  v.  Merchants'  Ins. 

Co.,  143 

Bartlett  v.  Fireman's  Fund  Ins. 

Co.,  27 

Barton  v.  Home  Ins.  Co.,  207,  208 
Bassett  v.  Parsons,  395 

Basye  v.  Adams,  56,  58,  386 

Batchelder  v.  Queen  Ins.  Co.,  162 
Bates  v.  Equitable  Ins.  Co.,  378 

Baubie  v.  JEtna  Ins.  Co.,  295 

Baxter  v.  Brooklyn  L.  Ins.  Co., 

119,  121 

Beals  v.  Home  Ins.  Co.,  355 

Bean  v.  Employers',  etc.,  Assur. 

Corp.,  438 

Beard  v.  Sharp,  58,  68 

Beatty's  Appeal,  393 

Bebee  v.  Hartford  County  M.  F. 

Ins.  Co.,  77 

Beebe  v.  Ohio,  etc.,  Ins.  Co.,  268 

Behler  v.  German,  etc.,  Ins.  Co.,  140 
Behrens  v.  Germania  F.  Ins.  Co.,  225 
Bell  v.  Peabody  Ins.  Co.,  131 


Bell  v.  Western,  etc.,  Ins.  Co.,        46 
Bemis  v.  Harbor  Creek,  etc.,  Ins. 

Co.,  265 

Benedict  v.  Ocean  Ins.  Co.,  185 

Ben  Franklin  Ins.  Co.  v.  Weary,  251 
Benham  v.  United  Guarantee,  etc., 

Co.,  464 

Benicia  Agri.  Works  v.  Germania 

Ins.  Co.,  190 

Bennett  v.  Agricultural  Ins.  Co.,  156 
v.  Lycoming,  etc.,  Ins.  Co.,        312 
Benninghoff  v.  Agricultural  Ins. 

Co.,  156 

Benton  v.  Farmers'  Mut.  Ins.  Co., 

186,  191 

v.  Martin,    '  36 

Berg  v.  Damkoehler,  389,  394 

Berger  v.  Pacific,  etc.,  Ins.  Co.,    442 
Bergman  v.  Commercial  Assur. 

Co.,  353 

Bergson  v.  Builders'  Ins.  Co.,        275 
Berliner  v.  Travelers'  Ins.  Co., 

398,  435 

Bernheimer  v.  City  of  Leadville,  135 
Berry  v.  American,  etc.,  Ins.  Co., 

48,  252 
v.  Knights',  etc.,  Indemnity  Co., 

22,  23 
Betcher  v.  Capital  F.  Ins.  Co., 

233,  234,  321 
Bevin  v.  Connecticut  Mut.  L.  Ins. 

Co.,  28 

Bigelow  v.  Berkshire,  etc.,  Ins. 

Co.,  412,  415 

v.  Granite,  etc.,  Ins.  Co.,    107,  226 
Biggs  v.  North  Carolina,  etc.,  Ins. 

Co.,  275 

Bigler  v.  New  York,  etc.,  Ins.  Co., 

184,  223,  224 

Bilbro  v.  Jones,  391 

Bilbrough  v.  Metropolitan   Ins. 

Co.,  232 

Billings  v.  Accident  Ins.  Co.,         413 
v.    Metropolitan    L.    Ins.    Co., 

422,  425 

Bingham  v.  Insurance  Co.,    299,  303 
Birdsey  v.  City  F.  Ins.  Co.,  275 


XX 


TABLE    OF    CASES. 


[References  are  to  Pages.] 


Birmingham  F.  Ins.  Co.  v.  Kroe- 

gher,  279 

v.  Pulver,  320,  339 

Bishop  v.  Agricultural  Ins.  Co.,  314 

v.  Clay,  etc.,  Ins.  Co.,  256 

Blackburn  v.  Vigors,     77,  82,  83,  84 

Blackerby   v.    Continental    Ins. 

Co.,  115 

Blackstone  v.  Standard,  etc.,  Ins. 

Co.,  4SO 

Blackwell  v.  Miami,  etc.,  Ins.  Co., 

266 

Blair  v.  Sovereign  F.  Ins.  Co.,  361 
Blanchard  v.  Atlantic,  etc.,  Ins. 

Co.,  125 

Bleakley  v.   Niagara,  etc.,   Ins. 

Co.,  204 

Blood  v.  Shine,  342 

Bloom  v.  Franklin  L.  Ins.  Co.,  446 
Blooming  Grove,  etc.,  Ins.  Co. 

v.  McAnerney,  163 

Bloomington   Mut.   B.   Ass'n   v. 

Blue,  60 

Blossom  v.  Lycoming  F.  Ins.  Co.,  318 
Blumer  v.  Phoenix  Ins.  Co.,  88,  96 
Boardman,  Re,  395 

Board  of  Education  v.  Citizens' 

Ins.,  etc.,  Co.,  464 

Boatman's,  etc.,  Ins.  Co.  v.  Par- 
ker, 211 
Boatwright  v.  ^Etna  Ins.  Co.,        233 
Bodine  v.  Exchange  F.  Ins.  Co., 

135,  154 

Boehm  v.  Combe,  35 

Boetcher  v.  Hawkeye  Ins.  Co.,  141 
Bogart  v.  Thompson,  65 

Boggs  v.  America  Ins.  Co.,  76,  81 
Bole  v.  New  Hampshire  F.  Ins. 

Co.,  232 

Bon  v.  Railway,  etc.,  Assur.  Co.,  437 
Bonefant  v.  American  F.  Ins.  Co., 

275,  289 

Bonham  v.  Iowa,  etc.,  Ins.  Co.,  247 
Boon  v.  ^Etna  F.  Ins.  Co.,  209 

Borden  v.  Hingham,  etc.,  Ins.  Co.,  34 
Boright  v.  Springfield,  etc.,  Ins. 

Co.,  191 


Born  v.  Home  Ins.  Co.,    170,  254,  255 
Boston,  etc.,  R.  Co.  v.  Mercan- 
tile Trust,  etc.,  Co.,  294,  452 
Boston  Ice  Co.  v.  Royal  Ins.  Co.,  262 
v.  Globe  Fire  Ins.  Co.,          19,  42 
Bosworth  v.  Merchants'  F.  Ins. 

Co.,  220 

v.  Western,  etc.,  Soc.,  113 

Boulden  v.  Phcenix  Ins.  Co.,  246 

Boutelle  v.  Westchester  F.  Ins. 

Co.,  205 

Bowden  v.  Vaughan,  95,  97 

Bowditch,  etc.,  Ins.  Co.  v.  Win- 
slow,  245 
Bowlin  v.  Hekla  F.  Ins.  Co.,  134,  316 
Bowman  v.  Agricultural  Ins.  Co.,  176 
v.  Franklin  F.  Ins.  Co.,  203 
v.  Moore,                                       394 
Boyd  v.  Insurance  Co.,            148,  179 
v.   Thuringia  Ins.   Co.,  265 
Boyden  v.  Massachusetts,  etc., 

Ins.  Co.,  389 

Boyle  v.  Hamburg,  etc.,  Ins.  Co.,  331 

Boynton  v.  Clinton,  etc.,  Ins.  Co.,  191 

v.  Farmers',  etc.,  Ins.  Co.,          278 

Bradbury  v.  Fire  Ins.  Ass'n,  187,  189 

v.  Westchester  F.  Ins.  Co.,        188 

Bradley  v.  Phrenix  Ins.  Co.,  361 

v.  Mutual,  etc.,  Ins.  Co.,    445,  446 

Bradshaw  v.   Agricultural   Ins. 

Co.,  343 

Brady  v.  Northwestern  Ins.  Co., 

294,  297,  368 

v.  Prudential  Ins.  Co.,  69 

v.  United  L.  Ins.  Ass'n,  89 

Brannin  v.  Mercer,  etc.,  Ins.,        276 

Breasted  v.  Farmers',  etc.,  Co.,    416 

Breckinridge  v.  American,  etc., 

Ins.  Co.,  278 

Breedlove  v.  Norwich,  etc.,  Ins. 

Soc.,  250 

Breuner  v.  Liverpool,  etc.,  Ins. 

Co.,  213,  214 

Brick  v.  Campbell,  391 

Bridges  v.  National  Union,    120,  168 
Briggs  v.  North  American,  etc., 

Ins.  Co.,  211,  212 


TABLE    OF    CASES. 


XXI 


[References 
Briggs  v.  North  British,  etc.,  Ins. 

Co.,  212 

Brighton  Mfg.  Co.  v.  Reading  F. 

Ins.  Co.,  232 

Brinley  v.  National  Ins.  Co.,          357 
British,  etc.,  Assur.  Co.  v.  Brad- 
ford, 184 
v.  Miller,                               187,  190 
British  Ins.  Co.  v.  Lambert,  30 
Britton  v.  Supreme  Council,          426 
Broadwater  v.  Lion  F.  Ins.  Co., 

183,   252,   300 

Brock  v.  Des  Moines  Ins.  Co.,      152 
v.  Dwelling  House  Ins.  Co., 

341,  345,  347 

Brown  v.  Balfour,  18 

v.  Cotton,  etc.,  Ins.  Co.,  265,  272 
v.  Equitable  L.  Assur.  Soc.,  409 
v.  Grand  Council,  125 

v.  Grand  Lodge,  393 

v.  Hartford  Ins.  Co.,  353 

v.  London  Assur.  Corp.,  312 

v.  Metropolitan  L.  Ins.  Co.,  99,  421 
v.  Quincy,  etc.,  Ins.  Co.,  370 

v.  Roger  Williams  Ins.  Co.,  359 
v.  Savannah,  etc.,  Ins.  Co.,  359 
v.  State  Ins.  Co.,  152 

v.  Sun  L.  Ins.  Co.,  416,  417 

v.  Supreme  Lodge,  418 

v.  United  States,  etc.,  Co.,        443 
v.  Westchester  F.  Ins.  Co.,        253 
Brown's  Appeal,  389 

Brownfield    v.    Mercantile,   etc., 

Ins.  Co.,  320 

Browning  v.  Home  Ins.  Co., 

76,  179,   261 
Bruce  v.  Connecticut,  etc.,  Ins. 

Co.,  426,  428 

v.  Continental  L.  Ins.  Co.,         118 

Brueck  v.  Phoenix  Ins.  Co.,  296 

Brugger  v.  State  Inv.  Ins.  Co.,      46 

Bryan  v.  National  L.  Ins.  Ass'n,  134 

v.  Traders'  Ins.  Co.,  265 

Bryant  v.  Ocean  Ins.  Co.,  95 

v.  Poughkeepsie,  etc.,  Ins.  Co.,  181 

Buchanan  v.  Exchange  F.  Ins. 

Co.,  175,  182,  277 


are  to  Pages.] 

Buckley  v.  Garrett,  267,  269,  275 
Buelow,  Re,  395 

Buffum   v.   Bowditch,   etc.,   Ins. 

Co.,  204,  244 

Buick  v.  Mechanics'  Ins.  Co.,  301 
Bumstead  v.  Dividend,  etc.,  Ins. 

Co.,  310 

Burbank  v.  Rockingham,  etc., 

Ins.  Co.,  272,  273 

Burdon  v.   Massachusetts,   etc., 

Ass'n,  124 

Burges  v.  New  York,  etc.,  Ins. 

Co.,  408 

Burgess  v.  Equitable,  etc.,  Ins. 

Co.,  171 

Burke  v.  Brig  M.  P.  Rich,  48 

v.  Prudential  Ins.  Co.,  54 

Burkhard  v.  Travelers'  Ins.  Co.,  416 
Burlington  Ins.  Co.  v.  Gibbons,    140 
v.  Lowery,  291,  317,  322 

Burner  v.  German,  etc.,  Ins.  Co.,  285 
Burnett  v.  Eufaula,  etc.,  Ins.  Co.,  267 
Bursinger  v.  Bank,  61,  278,  403 

Burson  v.  Fire  Ass'n,  247 

Burt  v.  Union,  etc.,  Ins.  Co.,  419 
Burton  v.  Connecticut  M.  L.  Ins. 

Co.,  54 

Bush  v.  Westchester  F.  Ins.  Co.,  146 
Bushnell  v.  Bushnell,  403 

Butero  v.  Travelers'  Ace.  Ins. 

Co.,  443 

Button  v.  American,  etc.,  Ace. 

Ass'n,  442 

Byers  v.  Farmers'  Ins.  Co.,    256,  263 


Cagle  v.  Chillicothe,  etc.,  Ins. 

Co.,  245 

Cahen  v.  Continental  L.  Ins. 

Co.,  378 

Caledonia  Ins.  Co.  v.  Traub,  345,  351 

Caledonian  Ins.  Co.  v.  Cooke,        364 

California  Ins.  Co.  v.  Gracey,        137 

v.   Union   Compress  Co., 

47,  221,  274 

California  Sav.  Bank  v.  Ameri- 
can Surety  Co.,  460 


XX11 


TABLE   OF    CASES. 


[References 

California  State  Bank  v.  Ham- 
burg, etc.,  Ins.  Co.,  266 
Cammock  v.  Lewis,  53 
Campbell  v.  American  F.  Ins.  Co., 

76,  112 

v.  German  Ins.  Co.,  272 

v.  New  England,  etc.,  Ins.  Co.,    89 

v.  Supreme  Conclave,  413 

Canfield  v.  Great  Camp,  etc.,         333 

v.  Watertown  F.  Ins.  Co.,  343 

Cannon  v.  Phoenix  Ins.  Co.,    195,  317 

Canton  Ins.  Office  v.  Woodside,    168 

Capital  City   Ins.   Co.  v.   Cald- 

well,  184 

v.  Jones,  381 

Caplis  v.  American  F.  Ins.  Co., 

101,  244,  253 

Caraher  v.  Royal  Ins.  Co.,  271 

Card  v.  Phoenix  Ins.  Co.,  268 

Carey  v.  German,  etc.,  Ins.  Co., 

171,  271 

v.  Home  Ins.  Co.,  162,  176 

Cargill  v.  Millers',  etc.,  Ins.  Co.,  184 
Carlin  v.  Western  Assur.  Co.,  283 
Carpenter  v.  American  Ins.  Co., 

73,  81 

v.  Continental  Ins.  Co.,  149 

v.  German-Amer.  Ins.  Co.,    45,  135 
v.  German,  etc.,  Ins.  Co.,  316 

v.  Knapp,  392,  406 

v.   Providence,  etc.,   Ins.   Co., 

26,  46,  47,  222,   224,   226 

v.  U.  S.  Life  Ins.  Co.,  58,  67 

v.  Snelling,  33 

Carr  v.  Hibernia  Ins.  Co.,  185 

v.  Williams'  Ins.  Co.,  286 

Carrigan  v.  Lycoming  F.  Ins.  Co., 

25,  43 
Carrington  v.  Commercial,  etc., 

Ins.  Co.,  377 

Carroll  v.  Boston,  etc.,  Ins.  Co.,    275 

v.  Charter  Oak  Ins.  Co.,  295 

v.  Girard  F.  Ins.  Co.,  349 

Carson  v.  Jersey  City  F.  Ins.  Co., 

76,  154,  204,  205 

v.  Vicksburg  Bank,  53 

Carter  v.  Boehm,  72,  75 


are  to  Pages.] 
Carter  v.  Humboldt  F.  Ins.  Co., 

44,  359 

Case  v.  Sun  Fire  Ins.  Co.,  361 

Cashau^v.  Northwestern,  etc., 

Ins.  Co.,  19 

Cassity  v.  New  Orleans  Ins.  Co.,  372 
Castellain  v.  Preston,  27 

Catholic  Knights  v.  Franke,  392 
Catoir  v.  American  L.  Ins.,  etc., 

Co.,  153 

Caudell  v.  Woodward,  56 

Centennial,   etc.,   Ass'n   v.   Par- 
ham,  163 
Central  Bank  v.  Hume,  389,  390,  395 
Central  City  Ins.  Co.  v.  Gates,     313 
Central  Trust  Co.  v.  Continental 

Trust  Co.,  400 

Cerys  v.  State  Ins.  Co.,  101 

Chainless  Cycle  Mfg.  Co.  v.  Se- 
curity Ins.  Co.,          336,  343,  348 
Chalfant  v.  Payton,  17 

Chamberlain    v.    British,    etc., 

Assur.  Co.,  239 

Chambers  v.  Atlas  Ins.  Co.,  361 

v.  Northwestern,  etc.,  Ins.  Co.,  103 
Chandler  v.  St.  Paul,  etc.,  Ins.  Co.,  361 
Chandos  v.  American  F.  Ins.  Co.,  353 
Chapman  v.  Atlantic,  etc.,  R.  Co.,   45 
v.  Mcllwrath,  407 

v.  Rockford  Ins.  Co., 

332,  339,  342,  352 

j  Chartiers  Co.  v.  McNamara,  33 

\  Cheeves  v.  Anders,  59,  65 

Chicago,  etc.,  R.  Co.  v.  Glenny,  373 
Chicago  L.  Ins.  Co.  v.  Needles,  21 
Chicago  Mut.  Life,  etc.,  Ass'n  v. 

Hunt,  20 

Chickasaw,  etc.,  Ins.  Co.  v.  Wel- 

ler,  375 

Chisholm  v.  National  Capitol  L. 

Ins.  Co.,  50,  65 

Chrisman  v.  State  Ins.  Co.,  41 

Christiansen  v.  Norwich  F.  Ins. 

Co.,  344,  347,  350 

Citizens',  etc.,  Ins.  Co.  v.  Doll, 

250,  276 
Citizens'  Ins.  Co.  v.  Hamilton,      343 


TABLE    OF    CASES. 


XX111 


[References 
City,  etc.,  Bank  v.  Pennsylvania 

F.  Ins.  Co.,  221 

City  F.  Ins.  Co.  v.  Corlies,  208 

City  Planing,  etc.,  Co.  v.  Mer- 
chants', etc.,  Ins.  Co.,      231,  286 
City  Sav.  Bank  v.  Whittle,  389 

Claffey  v.  Hartford  F.  Ins.  Co.,    184 
Claflin  v.  Franklin  Ins.  Co.,  326 

v.  U.  S.  Credit  System,  17 

v.  United  States,  etc.,  Co.,  459,  465 
Clapp   v.   Farmers',   etc.,    Ins. 

Ass'n,  251 

v.  Massachusetts  Ben.  Ass'n,    426 
Clark  v.  Allen,  56,  60,  61,  403 

v.  Dawson,  387 

v.  Durand,  390 

v.  Firemen's  Ins.  Co.,  191 

v.  German,  etc.,  Ins.  Co.,  173 

v.  Insurance  Co.,  300 

v.  Manufacturers'  Ins.  Co.,  78 

v.  New  England,  etc.,  Co., 

203,  224,  269 

v.  Union  Mut.  F.  Ins.  Co.,  80 

Clarke  v.  Morey,  20 

v.   Western   Assur.   Co., 

221,  228,  229 

Clason  v.  Smith,  100 

Clawson  v.   Citizens',   etc.,   Ins. 

Co.,  252 

Clay,  etc.,  Ins.  Co.  v.  Beck,  245 

v.  Huron,  etc.,  Co.,  249 

Cleaver  v.  Traders'  Ins.  Co., 

140,  152,  226 

Clemans  v.  Supreme  Assembly,    158 
Clement  v.  New  York  L.  Ins.  Co., 

59,    69,   409 

Clement  v.  Phenix  Ins.  Co.,  82 

Clevenger  v.  Mutual  L.  Ins.  Co.,  140 
Clinton  v.  Norfolk,  etc.,  Ins.  Co., 

41,  43,  260 

Clogg  v.  McDaniel,  60 

Cluff  v.  Mutual,  etc.,  Ins.  Co.,         446 
Cobb  v.  Covenant  Mut.  Ben.  Ass'n, 

88,  89,  425 

Coburn  v.  Travelers'  Ins.  Co.,      103 
Cockerill  v.  Cincinnati,  etc.,  Ins. 
Co.,  30 


are  to  Pages.'] 
Cochran  Cotton  Seed  Oil  Co.  v. 

Phoenix  Ins.  Co.,  297 

Cohen  v.  Continental  F.  Ins.  Co., 

32,  295 
Cole  v.  Germania  F.  Ins.  Co., 

237,  296 

v.  Union,  etc.,  Ins.  Co.,  402 

Collins  v.  Bankers'  Ace.  Ins.  Co.,  438 
v.  Charlestown,  etc.,  Ins.  Co.,  185 
v.  Fidelity,  etc.,  Co.,  441 

v.  London  Assur.  Corp.,      257,  272 
v.  Merchants',  etc.,  Ins.  Co., 

235,  245 

v.  St.  Paul,  etc.,  Ins.  Co.,  250 

Columbia  Ins.  Co.  v.  Cooper,  48,  100 
v.  Lawrence,  101 

Columbian  Ins.  Co.  v.  Lawrence, 

41,  70 

Combs  v.  Hannibal,  etc.,  Ins.  Co.,  156 
Commercial  Assur.  Co.  v.  New 

Jersey  Rubber  Co.,  299 

Commercial  Bank  v.  Fire  Ins. 

Co.,  324 

Commercial,  etc.,  Assur.  Co.  v. 

Hocking,  342 

Commercial,   etc.,    Ins.   Co.   v. 

Union  Mut.  Ins.  Co.,  32,  33 

Commercial  F.  Ins.  Co.  v.  Allen,   216 
Commercial  Ins.  Co.  v.  Hallock,    36 
v.  Robinson,  211 

v.  Spankneble,  263,  265 

Commercial  League  Ass'n  v.  Peo- 
ple, 23 
Commercial  Union  Assur.  Co.  v. 

Norwood,  220 

Commonwealth     v.     Equitable 

Ben.  Ass'n,  23,  426 

v.  Hide,  etc.,  Ins.  Co.,  181 

v.  Massachusetts,  etc.,  Ins.  Co.,  123 
v.  National  Ins.  Co.,  275 

v.  Nutting,  22 

v.  Reinoehl,  22 

v.  Vrooman,  21,  22,  129 

v.  Wetherbee,  426 

Commonwealth  Mut.  F.  Ins.  Co. 

v.  Huntzinger,  91 


XXIV 


TABLE    OF    CASES. 


[References 

Conboy  v.  Railway,  etc.,  Ass'n, 

440,  444 

Concordia  F.  Ins.  Co.  v.  Johnson,  237 
Condon  v.  Mutual,  etc.,  Ass'n,  121 
Cone  v.  Niagara  F.  Ins.  Co.,  48 

Conigland  v.  Smith,  388 

Connecticut,   etc.,    Ins.   Co.   v. 

Akens,       412,  415,  416,  417,  434 
v.  Burroughs,  390 

v.  Lathrop,  415 

v.  McWhirter,  417 

v.  Schaefer,  43,  54,  55,  59 

Connecticut  F.  Ins.  Co.  v.  Erie 

R.  Co.,  30 

v.  Tilley,  286 

Conover  v.  Mutual  Ins.  Co.,  256,  263 
Conrad,  Estate  of,  384,  388 

Constant  v.  Insurance  Co.,  33 

Continental,   etc.,    Ins.    Co.   v. 

Ruckman,  129,  132 

v.  Webb,  389 

Continental  Ins.  Co.  v.  Hulman,  112 

v.  Kasey,  75 

v.  Kyle,  286 

v.  Pruitt,  216 

v.  Wilson,  339 

Continental    L.    Ins.    Co.    v. 

Palmer,  388 

v.  Chamberlain,    129,  130,  400,  427 
v.  Volger,  60 

Converse  v.  Knights  Templars', 

etc.,  Co.,  417 

Cook  v.  Continental  Ins.  Co.,         289 

v.  Federal  Life  Ass'n,  130 

v.  Loew,  183 

Cooledge  v.  Continental  Ins.  Co.,   27 

Cooper  v.  Schaeffer,  28,  64 

Co-operative,  etc.,  Ins.  Order  v. 

Lewis,  426 

Copeland  v.  Phoenix  Ins.  Co.,  221 
Corbett  v.  Spring  Garden  Ins. 

Co.,  366 

Corcoran  v.  Mutual  L.  Ins.  Co.,  409 
Corkery  v.  Security  F.  Ins.  Co.,  310 
Corley  v.  Travelers',  etc.,  Ass'n,  442 
Cornwell  v.  Fraternal  Ace. 

Ass'n,  438 


are  to  Pages.] 

Cornish  v.  Accident  Ins.  Co.,  437 
Corrigan  v.  Connecticut  F.  Ins. 

Co.,  293 

Corson  v.  Anchor,  etc.,  Ins.  Co., 

90,  151,  329 

Corson,  Appeal  of,  55 

Cosgrave   Brewing,   etc.,   Co.  v. 

Starrs,  469 

Cottingham  v.  Fireman's  Fund 

Ins.  Co.,  261 

Coursin  v.   Pennsylvania   Ins. 

Co.,  150 

Coventry  v.  Evans,  316 

Cowan  v.  Iowa  State  Ins.  Co.,  43,  260 
Cowart  v.  Capital  City  Ins.  Co.,  222 
Cowell  v.  Phoenix  Ins.  Co.,  252 

Craig  v.  Van  Bebber,  383 

Cravens  v.  New  York  L.   Ins. 

Co.,  150 

Creed  v.  Sun  Fire  Office,  48,  156 
Crescent  Ins.  Co.  v.  Camp,  249 

Crikelair  v.   Citizens'   Ins.   Co., 

253,  255 
Critchett  v.  American  Ins.  Co., 

114,  115 

Croft  v.  Hanover  F.  Ins.  Co.,  30,  137 
Cronin  v.  Fire  Ass'n,  181,  229 

v.  Vermont    L.    Ins.    Co., 

40,  51,  60,  67 

Cronkhite  v.  Travelers'  Ins.  Co.,  416 
Crosby  v.  Franklin  Ins.  Co.,  180 
Cross  v.  National  F.  Ins.  Co.,  46,  48 
Grossman  v.  Massachusetts  Ben. 

Ass'n,  122 

Crosswell  v.  Connecticut  Indem- 
nity Ass'n,  61,  56,  66 
Grotty  v.  Union,  etc.,  Ins.  Co.,  52,  55 
Crown  Point  Iron  Co.  v.  JEtna. 

Ins.  Co.,  299,  303 

Cucullu  v.  Orleans  Ins.  Co.,          203 
Cumberland  Valley,  etc.,  Protec- 
tion Co.  v.  Douglas,  96 
Cumberland  Valley,  etc.,  Co.  v. 

Schell,  129,  145,  170 

Cummings  v.  Cheshire,  etc.,  Ins. 

Co.,  172,  275 


TABLE    OF    CASES. 


XXV 


[References 
Cummins,  v.  Agricultural  Ins. 

Co.,  286,  290 

v.  National  F.  Ins.  Co.,       260,  266 
Currier  v.  Continental  L.  Ins. 

Co.,  57,  59,  64,  65 

v.  Mutual,  etc.,  Ass'n,  147 

Curtis  v.  Home  Ins.  Co.,  45 

Curtiss  v.  ^Etna,  etc.,  Ins.  Co.,      60 

Cushman  v.  United  States  L.  Ins. 

Co.,    ,  424 

v.  Northwestern  Ins.  Co.,      34,  364 

Cutchin  v.  Johnston,  384 


Daggs  v.  Orient  Ins.  Co.,  21 

Dailey  v.  Preferred,  etc.,  Ass'n,    158 
v.  Westchester  F.  Ins.  Co.,        265 
Dakin  v.  Liverpool,  etc.,  Ins.  Co.,  248 
Dalby  v.  India,  etc.,  Assur.  Co., 

28,  43,  50 

Dane  v.  Mortgage  Ins.  Corp.,          18 
Daniels  v.  Hudson  River  F.  Ins. 

Co.,  80,  81,  87,  89,  91 

Dannhauser  v.  Wallenstein,          407 
Darrow  v.   Family   Fund   Soc., 

413,  419 

Date  v.  Gore,  etc.,  Ins.  Co.,  203 

Davenport  v.  Long  Island  Ins. 

Co.,  349 

Davidson  v.  Hawkeye  Ins.  Co., 

45,  261 
Davis  v.  JEtna,  etc.,  Ins.  Co., 

131,  136 

v.  Anchor,  etc.,  Ins.  Co.,  335 

v.  Atlas  Assur.  Co.,      336,  338,  339 
v.  Henry,  343 

v.  Iowa  State  Ins.  Co.,  250 

v.  Pioneer  Furniture  Co.,  247 

v.  Oshkosh,  etc.,  Co.,  119,  123 

v.  Shearer,  125 

Day  v.  Mill  Owners',  etc.,  Ins. 

Co.,  232 

Dayton  Ins.  Co.  v.  Kelly,  30 

Dean  v.  Dicker,  50 

De  Farconnet  v.  Western  Ins. 

Co.,  360 

iii — ELLIOTT  INS. 


are  to  Pages.] 

De  Gogorza  v.  Knickerbocker, 

etc.,  Ins.  Co.,  412 

Deitz  v.  Providence  Wash.  Ins. 

Co.,  134 

Delancey  v.  Insurance  Co.,  138 

Delaware  Ins.  Co.  v.  Bonnett,  248 
De  Loy  v.  Travelers'  Ins.  Co.,  438 
Dennis  v.  Union,  etc.,  Ins.  Co.,  417 
Depaba  v.  Ludlow,  50 

De  Raiche  v.  Liverpool,  etc.,  Ins. 

Co.,  310 

Des  Moines  Ice  Co.  v.  Niagara 

F.  Ins.  Co.,  234,  292 

Detroit,  etc.,  Ins.  Co.  v.  Merrill,  124 
De  Van  v.  Commercial,  etc., 

Ass'n,  431 

Devens  v.  Mechanics',  etc.,  Ins. 

Co.,  151 

Dewees  v.  Manhattan  Ins.  Co.,  162 
De  Witt  v.  Agricultural  Ins.  Co.,  221 
De  Wolf  v.  New  York,  etc.,  Ins. 

Co.,  76 

Diack,  Re,  395 

Dibble  v.  Northern  Assur.  Co.,  301 
Dick  v.  Merchants'  Ins.  Co.,  134 
Dickerman  v.  Quincy,  etc.,  Ins. 

Co.,  131 

v.  Vermont,  etc.,  Ins.  Co.,  41 

Diehl  v.  Adams,  etc.,  Ins.  Co., 

149,  234 

Dilleber  v.  Home  L.  Ins.  Co.,  79 
Dilling  v.  Draemel,  373 

Dixon  v.  National  L.  Ins.  Co.,  60 
Dobson  v.  Sotheby,  184 

Dobyns  v.  Bay  State,  etc.,  Ass'n,  396 
Dodge  v.  Hamburg,  etc.,  Ins. 

Co.,  259 

Dogge  v.  Northwestern,  etc.,  Ins. 

Co.,  276 

Dolan  v.  Mutual,  etc.,  Ass'n,  402 
Dolliver  v.  St.  Joseph,  etc.,  Ins. 

Co.,  43,  93,  179,  204,  244,  247 

Donnell  v.  Donnell,  48,  275 

Donnelly  v.  Cedar  Rapids  Ins. 

Co.,  162 

Dooly  v.  Hanover  F.  Ins.  Co., 

78,  247,  252 


XXVI 


TABLE    OF    CASES. 


[References 

Doud  v.  Citizens'  Ins.  Co.,  286 

Dougherty  v.  German,  etc.,  Ins. 

Co.,  325 

Dover  Glass  Works  v.  American 

F.  Ins.  Co.,  229,  253,  269 

Dowd  v.  American  F.  Ins.  Co.,  251 
Dowdale's  Case,  8 

Dowling  v.  Lancashire  Ins.  Co.,  159 
Downey  v.  Hoffer,  53 

Dozier  v.   Fidelity  &   Gas.   Co., 

481,  441 

Dreher  v.  ^3Etna  Ins.  Co.,  268 

Drennen  v.  London  Assur.  Corp., 

267,  268 

Driefontein,  etc.,  Mines  v.  Jan- 
sen,  26 
Driggs  v.  Albany  Ins.  Co.,            297 
Drinkwater  v.  London  Assur. 

Corp.,  208 

Dryer  v.  Security  F.  Ins.  Co.,  133 
Duluth  Nat.  Bank  v.  Knoxville 

F.  Ins.  Co.,  131 

Dumas  v.   Northwestern,   etc., 

Ins.  Co.,  249 

Dunbar  v.  Phenix  Ins.  Co.,  77 

Duncan  v.  Preferred,  etc.,  Ass'n, 

437 

v.  Sun  Fire  Ins.  Co.,  92 

Dungan  v.  Mutual,  etc.,  Ins.  Co.,  391 
Dupreau  v.  Hibernia  Ins.  Co., 

45,  242 

Duran  v.  Standard,  etc.,  Ins.  Co.,  445 
Durar  v.  Hudson,  etc.,  Ins.  Co.,  278 
Durkee  v.  India  Mut.  Ins.  Co.,  105 
Duvall  v.  Goodson,  384,  394 

Dwelling    House    Ins.    Co.    v. 

Brodie,  158 

v.  Hardie,  117 

v.  Kansas  Loan,  etc.,  Co.,         379 
Dwight  v.  Germania  L.  Ins.  Co., 

418,  436 
E 

Eadie  v.  Slimmon,  390,  391,  407 
Eagle  Fire  Co.  v.  Globe,  etc.,  Co.,  144 
Eagle  Ins.  Co.  v.  Lafayette  Ins. 

Co.,  27,  359 


are  to  Pages.] 

Eames  v.  Home  Ins.  Co.,  31 

Early  v.  Standard,  etc.,  Ins.  Co., 

433,  434 
Eastern  R.  Co.  v.  Relief  F.  Ins. 

Co.,  44,  45 

Eastman  v.  Carroll,  etc.,   Ins. 

Co.,  276 

East  Texas  F.  Ins.  Co.  v.  Blum, 

136,  220 

v.  Brown,  251 

v.  Clarke,  264 

v.  Kempner,  171,  286 

Eckel  v.  Renner,  56,  60,  403 

Eddy  v.  London  Assur  Corp.,        222 
Eddy  Street  Iron  Foundry  v. 

Hampden,  etc.,  Ins.  Co.,  189 
Edington  v.  ^Etna  L.  Ins.  Co.,  428 
Edmands  v.  Mutual,  etc.,  Ins. 

Co.,  253,  264 

Edwards  v.  Travelers'  L.  Ins. 

Co.,  416 

Egan  v.  Supreme  Council,  403 

Eggenberger  v.  Guarantee,  etc., 

Ass'n,  436 

Eilenberger   v.   Protective,   etc., 

Ins.  Co.,  162,  163 

Elkhart,  etc.,  Ass'n  v.  Houghton,  66 
Ellerbe  v.  Barney,  122,  123 

Ellicott  v.  Coffin,  343 

Elliott  v.  Ashland,  etc.,  Ins.  Co., 

44,  252 

v.  Farmers'  Ins.  Co.,  292 

Ellis  v.  Council  Bluffs  Ins.  Co., 

276,  361 

v.  Insurance  Co.,  245,  275 

v.  Kreutzinger,  275 

v.  Massachusetts,  etc.,  Ins.  Co.,  150 
Ellmaker  v.  Franklin  F.  Ins.  Co., 

184 

Ellsworth  v.  JEtna  Ins.  Co.,          210 
Ely  v.  Hallett,  72 

Embler  v.  Hartford,  etc.,  Ins.  Co., 

452 

Embry's  Adm'rs  v.  Harris,  405 

Emerick  v.  Coakley,  28,  407 

Emery  v.  Boston  Mar.  Ins.  Co.,      30 
v.  Wase,  346 


TABLE    OF    CASES. 


XXV11 


[References 
Employers',  etc.,  Corp.  v.  Merrill, 

15,  29 

Endowment  Rank  v.  Cogbill,  421 
English  v.  Franklin  F.  Ins.  Co., 

186,  190 

Enos  v.  Sun  Ins.  Co.,  140,  154 

v.  St.  Paul,  etc.,  Ins.  Co.,  131 

Equitable  Ace.  Ins.  Co.  v.  Osborn, 

430 

Equitable,  etc.,  Ass'n,  In  re,  125 
Equitable,  etc.,  Soc.  v.  Patterson,  416 
Equitable  Ins.  Co.  v.  Cooper,  140 
Equitable  L.  Assur.  Soc.  v.  Mc- 

Elroy,  31,  149,  424 

Equitable  L.  Ins.  Co.  v.  Hazle- 

wood,  59,  66 

Erb  v.  German,  etc.,  Ins.  Co.,  25,  262 
Erdman  v.  Mutual  Ins.  Co.,  125 

Ermentrout  v.  Girard,  etc.,  Ins. 

Co.,      146,  152,  193,  194,  213,  312, 
313,  316,  322 
Ervin  v.  New  York,  etc.,  Ins.  Co., 

185 
Eureka,  etc.,  Ins.  Co.  v.  Baldwin, 

291 

Everett  v.  Continental  Ins.  Co.,  189 
Excelsior  F.  Ins.  Co.  v.  Royal 

Ins.  Co.,  47,  380 

Exchange  Bank  v.  Loh,        28,  53,  65 

F 

Fabyan  v.  Union,  etc.,  Ins.  Co.,  171 
Fairchild  v.  Northeastern  M.  L. 

Ass'n,  61 

Fairfield  Packing  Co.  v.  South- 
ern Mut.  Ins.  Co.,  226 
Falk  v.  Janes,  403 
Farmers',  etc.,  Ins.  Co.  v.  Curry, 

107,  108,  250 
Farmers',  etc.,  Ins.  Ass'n  v.  Kry- 

der,  188 

v.  Price,  260 

Farmers'  Ins.  Co.  v.  Archer,  266 

Farnum  v.  Phoenix  Ins.  Co., 

117,  303,  332,  352 
Faulkner  v.  Manchester  F.  Assur. 
Co.,  301 


are  to  Pages.'} 
Faunce  v.  State,  etc.,  Assur.  Co., 

35,  36 
Faust  v.  American  F.  Ins.  Co., 

134,  235 

Fenwick  v.  Schmalz,  429 

Ferdon  v.  Canfield,  389 

Fernandez  v.  Great  Western  Ins. 

Co.,  171 

v.  Merchants',  etc.,  Ins.  Co.,     210 
Fidelity,  etc.,  Ass'n  y.  Ficklin,    108 
v.  Jeffords,  57,  94 

v.  McDaniel,  425 

v.  Miller,  107 

Fidelity,  etc.,  Co.  v.  Alpert, 

81,  90,  91 

v.  Consolidated  Nat'l  Bank,      461 
v.  Eickhoff,  15,  462 

v.  Fordyce,  456 

v.  Freeman,  416 

v.  Gate  City  Nat'l  Bank, 

15,  461,  463 

v.  Johnson,  430,  431,  441 

v.  Lowenstein,  433,  449 

v.  Sittig,  439 

v.  Teter,  432 

v.  Waterman,  433 

Finch  v.  Grand  Grove,  390 

v.  Modern  Woodmen,  428 

Findeisen  v.  Metropole  F.  Ins. 

Co.,  149 

Finley  v.  Lycoming,  etc.,  Ins.  Co., 

267,  272 

Fire  Ass'n  v.  Flournoy,  274 

v.  Rosenthal,  368 

v.  Williamson,  203 

Fire  Ins.  Ass'n  v.  Merchants', 

etc.,  Transp.  Co.,  371 

Fire  Ins.  Co.  v.  Felrath,  324 

Fireman's  Fund  Ins.  Co.  v.  Nor- 
wood, 143,  151,  157,  161 
v.  Pekor,  114 
v.  Sholom,  213 
Firemen's  Ins.  Co.  v.  Appleton, 

etc.,  Co.,  241 

v.  Floss,  268 

v.  Holt,  224 


XXV111 


TABLE    OF    CASES. 


[References  are  to  Pages.] 


First  Baptist  Church  v.  Citizens', 

etc.,  Ins.  Co.,  358 

First  Cong.  Church  v.  Holyoke, 

etc.,  Ins.  Co.,  236,  239,  282 

First  Nat'l  Bank  v.  Lancashire 

Ins.  Co.,  153 

Fischer  v.  American  L.  of  H.,       392 
v.  Merchants'  Ins.  Co., 

332,  339,  351 

v.  Travelers'  Ins.  Co.,  442 

Fish  v.  Cottenet,  30 

Fisher  v.  Donovan,  53,  384 

v.  Metropolitan  L.  Ins.  Co.,          68 

Fitch  v.  American,  etc.,  Ins.  Co., 

91,  413 

Fitchburg,   etc.,   Bank  v.   Ama- 
zon Ins.  Co.,  255 
Fitchburg  R.  Co.  v.  Charlestown, 

etc.,  Ins.  Co.,  189 

Fitchner  v.  Fidelity,  etc.,  Ass'n,  401 
Fitzgerald  v.  Connecticut  F.  Ins. 

Co.,  289 

v.  German,  etc.,  Ins.  Co.,  195 

v.  Hartford,  etc.,  Ins.  Co.,    56,  403 

Fitzherbert  v.  Mather,  82 

Flatley  v.  Phenix  Ins.  Co.,  315 

Fleisch  v.  Insurance  Co.,        324,  325 

Fleming  v.  Hartford  F.  Ins.  Co.,  133 

Fletcher  v.  Commonwealth  Ins. 

Co.,  251 

v.  German,  etc.,  Ins.  Co.,     312,  314 

Flinn  v.  Headlam,  101 

Flournoy  v.  Traders'  Ins.  Co.,      246 

Flynn   v.    Equitable    L.    Assur. 

Soc.,  133 

Fogg  v.  Middlesex,  etc.,  Ins.  Co.,  275 
Foley  v.  Manufacturers'  &  B.  F. 

Ins.  Co.,  46 

Follis  v.   United   States,   etc., 

Ass'n,  439 

Foote  v.  Hartford  F.  Ins.  Co.,  265 
Forbes  v.  American  Ins.  Co.,  185 
Ford  v.  Buckeye  State  Ins.  Co.,  121 
Forehand  v.  Niagara  Ins.  Co.,  263 
Forest  City  Ins.  Co.  v.  Hardesty,  273 
Fort  Wayne  Ins.  Co.  v.  Irwin,  321 


Forward  v.  Continental  Ins.  Co., 

144,  158,  261,  264 

Foster  v.  Gile,  389 

v.  Van  Reed,  379,  380 

Fournier  v.  German,  etc.,  Ins. 

Co.,  307 

Fowle  v.  Springfield,  etc.,  Ins. 

Co.,  251,  310 

Fowler  v.  .(Etna  F.  Ins.  Co., 

80,  93,  205 

v.  Metropolitan  L.  Ins.  Co.,  113 
v.  New  York,  etc.,  Ins.  Co.,  41 
v.  Phrenix  Ins.  Co.,  206 

Fox  v.  Masons',  etc.,  Ace.  Ass'n, 

332,  333 

v.  Phenix  F.  Ins.  Co.,  47 

Fraim  v.  National  F.  Ins.  Co., 

235,  284 

Francis  v.  Butler,  etc.,  Ins.  Co.,   276 
Franklin  v.  New  Hampshire  F. 

Ins.  Co.,  341 

Franklin  F.  Ins.  Co.  v.  Brock,       179 
v.  Chicago  Ice  Co.,  239 

v.  Martin,  129,  179 

v.  Massey,  302 

v.  Updegraff,  179 

Franklin  Ins.  Co.  v.  Sears,  147 

v.  Villeneuve,  410 

Franklin  L.  Ins.  Co.  v.  Hazzard,    60 
v.  Wallace,  115,  117 

Fraternal,  etc.,  Ins.  Co.  v.  Apple- 
gate,  390 
Fred  J.  Kiesel  &  Co.  v.  Sun  Ins. 

Office,  214 

Freeman  v.   Mercantile  &  Ace. 

Ass'n,  430,  441 

v.  Travelers'  Ins.  Co.,  416,  439 

French  v.  Lafayette  Ins.  Co.,        359 

v.  Mutual,  etc.,  Ass'n,  125 

v.  Rogers,  47 

Friezen  v.  Allemania  F.  Ins.  Co.,  361 

Froehly  v.  North  St.  Louis,  etc., 

Ins.  Co.,  278 

Frost's,  etc.,  Works  v.  Millers' 

Ins.  Co.,  171,  184 

Fugure  v.  Mutual  Society,  392 


TABLE    OF    CASES. 


XXIX 


[References 
Fullam  v.  New  York,  etc.,  Ins. 

Co.,  359,  361 

Fuller   v.   Metropolitan   L.   Ins. 

Co.,  16 

v.  Phoenix  Ins.  Co.,  173 

Funke  v.  Minnesota,   etc.,   Ins. 

Ass'n,  220,  224 

G 

Gale  v.  Belknap  County  Ins.  Co.,  224 
Gambs  v.   Covenant,  etc.,  Ins. 

Co.,  390 

Ganser  v.  Fireman's  Fund  Ins. 

Co.,  22,  30 

Gans  v.  St.  Paul,  etc.,  Ins.  Co., 

144,  154 

Garber  v.  Bresee,  123 

Garner  v.  Mutual  F.  Ins.  Co.,        310 
Garrettson  v.   Merchants',  etc., 

Ins.  Co.,  185,  336,  339 

Garrison  v.  Farmers',  etc.,  Ins. 

Co.,  170,  294 

Garver  v.  Hawkeye  Ins.  Co.,  250,  252 
Gasser  v.  Sun  Fire  Office,  339 

Gee  v.  Cheshire,  etc.,  Ins.  Co., 

223,  224 

Geiss  v.  Franklin  Ins.  Co.,      202,  249 
George  v.  Goldsmiths',  etc.,  Ins. 

Ass'n,  471 

George  Dee  &  Sons  Co.  v.  Key 

City  F.  Ins.  Co.,  340,  348 

Georgia,  etc.,  Ins.  Co.  v.  Allen,     168 

v.  Bartlett,  259 

v.  Brady,  248 

v.  Goode,  310 

v.  Hall,  267 

v.  Kinnier,  258,  273 

v.  Rosenfield,  171,  220 

Gere  v.  Council  Bluffs  Ins.  Co.,    338 

Gerhauser  v.  North  British,  etc., 

Ins.  Co.,  179 

Gerling  v.  Agricultural  Ins.  Co.,   265 
German-Amer.  Ins.  Co.  y.  Norris,  77 
German,  etc.,  Ins.  Co.  v.  Ether- 
ton,  352 
v.  Humphrey,                         171,  254 
v.  Norris,  320 


are  to  Pages.  ] 

German,  etc.,  Ins.  Co.  v.  St.  Paul,  220 
v.  Steiger,  232 

German  F.   Ins.   Co.  v.  Eddy, 

334,  335,  367 

v.  Roost,  212 

v.  Thompson,  46,  173 

German  Ins.  Co.  v.  Amsbaugh, 

306,  330 

v.  Emporia,  etc.,  Ass'n,  222 

v.  Fairbank,  317,361 

v.  Gibe,  265 

v.  Gibson,  148,  149 

v.  Gray,  144 

v.  Jansen,  364 

v.  Wright,  236 

v.  York,  265 

Germania  F.  Ins.  Co.  v.  Deckard,  207 
v.  Home  Ins.  Co.,  268 

v.  Klewer,  171,  225 

v.  Stewart,  263,  336,  338 

Germania  Ins.  Co.  v.  Sherlock,    195 
v.  Rudwig,  107,  108 

Germania  L.  Ins.  Co.  v.  Koeh- 

ler,  417 

v.  Lunkenheimer,  156 

Gerrish  v.  German  Ins.  Co.,          34 
Getchell  v.  ^Etna  Ins.  Co.,  180 

Getman  v.  Guardian  F.  Ins.  Co.,   274 
Gettelman  v.  Commercial,  etc., 

Assur.  Co.,  251 

Gibb  v.  Philadelphia  F.  Ins.  Co.,  263 
Gibbons  v.  German  Ins.,  etc., 

Inst,  194,  195 

Gibson  v.  Missouri,  etc.,  Ins.  Co.,  327 
Gillett  v.  Liverpool,  etc.,  Ins. 

Co.,  221 

Gilliat  v.  Pawtucket,  etc.,  Ins. 

Co.,  95 

Gillion  v.  Northern  Assur.  Co.,     358 
Gilman  v.  Dwelling  House  Ins. 

Co.,  45 

Gilson  v.  Delaware,  etc.,  Canal 

Co.,  196 

Ging  v.  Travelers'  Ins.  Co.,          443 
Girard  Life  Ins.  Co.  v.  Mutual 

L.  Ins.  Co.,  119 

Givens  v.  Veeder,  53 


XXX 


TABLE    OF    CASES. 


[References 
Gladding  v.  California,  etc.,  Ins. 

Ass'n,  154 

Gladstone  v.  King,  82 

Glanz  v.  Gloeckler,  389 

Glass  v.  Walker,  361 

Glaze  v.  Three  Rivers,  etc.,  Ins. 

Co.,  266 

Gledstanes  v.  Royal  Exch.,  etc., 

Corp.,  19 

Glen  v.  Hope,  etc.,  Ins.  Co.,  378 

Glendale  Woolen  Co.  v.  Protec- 
tion Ins.  Co.,  88,  230 
Glenn  v.  Burns,  388 
Glens  Falls,  etc.,  Co.  v.  Travelers' 

Ins.  Co.,  455,  457 

Globe,  etc.,  Ins.  Co.  v.  Wagner, 

94,  426 

Globe  Mut.  Ben.  Ass'n,  In  re,  20 
Goddard  v.  King,  343 

v.  Monitor  Ins.  Co.,  176 

Godfrey  v.  Wilson,  391 

Godin   v.   London   Assur.   Co., 

221,  371 

Godsall  v.  Boldero,  28,  55 

Goetzman  v.  Connecticut,  etc., 

Ins.  Co.,  445 

Goit  v.  National,  etc.,  Ins.  Co., 

276,  302 

Golder  v.  Mueller,  342 

Goode  v.  Georgia,  etc.,  Ins.  Co., 

134,  157 

Gooden  v.  Amoskeag  F.  Ins.  Co.,  359 
Goodman  v.  Jedidjah  Lodge,  124 
Goodwillie  v.  London  Guarantee, 

etc.,  Co.,  454 

Goodwin  v.  Massachusetts,  etc., 

Ins.  Co.,  112 

v.  Provident,  etc.,  Ass'n,  410 

Gore  v.  Canada  L.  Assur.  Co.,  132 
Gottsman  v.  Pennsylvania  Ins. 

Co.,  203 

Gould  v.  Dwelling  House  Ins. 

Co.,  141,  154,  277 

Goulstone  v.  Royal  Ins.  Co.,  48 
Grable  v.  German  Ins.  Co.,  261 

Grace  v.  American,  etc.,  Ins.  Co.,  300 
Graham  v.  Insurance  Co.,  46 


are  to  Pages.] 
Grandin  v.  Rochester,  etc.,  Ins. 

Co.,  243 

Grand  Lodge  v.  Child,  395 

v.  Noll,  394,  395 

Grand  Rapids,  etc.,  Co.  v.  Fidel- 
ity, etc.,  Co.,  458 
Grand   Rapids   F.   Ins.   Co.   v. 

Finn,  338,  339 

Grange    Mill    Co.    v.    Western 

Assur.  Co.,  45 

Granger  v.  Manchester  F.  Assur. 

Co.,  151 

Grangers'  L.  Ins.  Co.  v.  Brown,    102 
Grant  v.  Alabama,  etc.,  Ins.  Co.,   119 
v.  Eliot,  etc.,  Ins.  Co.,  278 

v.  Kline,  28,  53 

v.  Parkinson,  42 

Grattan  v.  Metropolitan  L.  Ins. 

Co.,  100,  156,  418,  436 

Gray  v.  Germania  F.  Ins.  Co.,  161 
Green  v.  Holway,  33 

v.  Liverpool,  etc.,  Ins.  Co.,         187 
v.  Merchants'  Ins.  Co.,  75 

Greene  v.  Lycoming  F.  Ins.  Co.,  140 
Greenleaf  v.  St.  Louis  Ins.  Co.,  171 
Greenlee  v.  North  British,  etc., 

Ins.  Co.,  235,  269 

Greenwich    Ins.    Co.    v.    Provi- 
dence, etc.,  Co.,  304 
Greenwood  v.  New  York  L.  Ins. 

Co.,  140 

Gresham  v.  Equitable  Ace.  Ins. 

Co.,  442 

Grevemeyer  v.  Southern,  etc., 

Ins.  Co.,  48 

Griffey  v.  New  York,  etc.,  Ins. 

Co.,  302,  303,  313 

Griffin  v.  Prudential  Ins.  Co.,       398 
v.  Ranney,  33 

v.  Western,  etc.,  Ass'n,  445 

Griffith  v.  New  York,  etc.,  Ins. 

Co.,  397 

Grigsby  v.  German  Ins.  Co.,  326 
Gristock  v.  Royal  Ins.  Co.,  78 

Griswold  v.  American,  etc.,  Ins. 

Co.,  277 

v.  Sawyer,  386 


TABLE   OF    CASES. 


XXXI 


[References 

Gross  v.  St.  Paul,  etc.,  Ins.  Co.,   324 
Grosvenor  v.  Atlantic  P.   Ins. 

Co.,  276 

Grubbs  v.  North  Carolina,  etc., 

Ins.  Co.,  149 

v.  Virginia,  etc.,  Ins.  Co.,          226 
Guarantee  Co.  v.  Mechanics'  Sav. 

Bank,  etc.,  Co.,  464 

Guardian,  etc.,  Ins.  Co.  v.  Hogan, 

53,  54 

Gude  v.  Exchange  F.  Ins.  Co.,       135 
Guest  v.  New  Hampshire  F.  Ins. 

Co.,  43,  47,  221 

Guthrie  v.  Connecticut  Indem. 

Ass'n,  359 

H 

Hackett  v.  Philadelphia  Under- 
writers, 227 
Haden  v.  Farmers',  etc.,  Ass'n,    252 
Haider  v.   St.  Paul,  etc.,  Ins. 

Co.,  252 

Hale  v.  Life  Indemnity,  etc.,  Co., 

54,  103 
Haley  v.  Dorchester,  etc.,  Ins. 

Co.,  183 

Hall  v.   Concordia  F.   Ins.   Co., 

182,  221 
v.  Dorchester,   etc.,   Ins.   Co., 

275,  276 

v.  Insurance  Co.,  178,  281 

v.  Niagara  F.  Ins.  Co.,        70,  353 

v.  Norwalk  F.  Ins.  Co.,  343 

v.  Railroad  Co.,  30 

v.  Union,  etc.,  Ins.  Co.,       137,  140 

Halpin  v.  ^3tna  F.  Ins.  Co.,   230,  289 

v.  Phenix  Ins.  Co.,  287 

Hamberg  v.  St.  Paul,  etc.,  Ins. 

Co.,  348 

Hamblet  v.  City  Ins.  Co.,  135 

Hamburg,  etc.,  Ins.  Co.  v.  Gar- 

lington,  185,  215,  366,  368 

Hamilton   v.   Dwelling   House 

Ins.  Co.,  158 

v.  Home  Ins.  Co.,  332,  339,  341 
v.  Liverpool,  etc.,  Ins.  Co.,  339 
v.  Royal  Arcanum,  392 


are  to  Pages.] 

Hamilton  v.  Royal  Ins.  Co.,          360 
Hamm  Realty  Co.  v.  New  Hamp- 
shire F.  Ins.  Co.,  301 
Hampton  v.  Hartford  F.  Ins.  Co.,  292 
Hancock  v.  Fidelity,  etc.,  Ins. 

Co.,  408 

Hancox  v.  Fishing  Ins.  Co.,      41,  44 
Hanf    v.    Northwestern,    etc., 

Ass'n,  163 

Hankins  v.  Rockford  Ins.  Co.,     140 
Hanley  v.  Life  Ass'n,  118 

Hannan  v.  Williamsburgh,  etc., 

Ins.  Co.,  175,  186 

Hanover,  etc.,  Ins.  Co.  v.  Bohn, 

44,  46 

Hanover  F.  Ins.  Co.  v.  Ames,         147 
v.  Bohn,  247 

v.  Dole,  306,  329 

v.  Hatton,  360 

v.  Mannasson,  216 

v.  Shrader,  47 

Hansen  v.  Supreme  Lodge,  124 

Harbour  Commissioners  v.  Guar- 
antee Co.,  464 
Hardie  v.  St.  Louis,  etc.,  Ins.  Co.,  36 
Hardy  v.  Union,  etc.,  Ins.  Co.,  224 
Harley  v.  Heist,  389 
Harnden  v.  Milwaukee,  etc.,  Ins. 

Co.,  313,  315,  323 

Harnickell  v.  New  York  L.  Ins. 

Co.,  36,  111 

Harper  v.  New  York,  etc.,  Ins. 

Co.,  282 

v.  Phoenix  Ins.  Co.,  446 

Harrington  v.  Fitchburg,  etc., 

Ins.  Co.,  292,  353,  378 

Harris  v.  Phoenix  Ins.  Co.,  325 

v.  York,  etc.,  Ins.  Co.,  208 

Hart  v.  Citizens'  Ins.  Co.,  361 

v.  Kennedy,  343 

v.  Modern  Woodmen,  412 

v.  National    Masonic,    etc., 

Ass'n,  102 

v.  Niagara,  etc.,  Ins.  Co.,  96 

Hartford,  etc.,  Ins.  Co.  v.  Har- 

mer,  76,  96 

v.  Lasher  Stocking  Co.,  263 


XXX11 


TABLE    OF    CASES. 


[References  are  to  Pages.'} 


Hartford  F.  Ins.  Co.  v.  Bonner 

Merc.  Co.,  342,  346 

v.  Cannon,  348 

v.  Com'r  of  Ins.,  22 

v.  Davenport,  93 

v.  Haas,  146,  159 

v.  Keating,  45,  47,  242,  250 

y.  Peebles  Hotel  Co.,  355 

v.  Reynolds,  135 

v.  Ross,  267 

v.  Small,  141,  226 

v.  Walsh,  203,  294 

v.  Williams,  275 

Hartford  Steam  Boiler,  etc.,  Co. 

v.  Cartier,  401 

Hartman  v.  Keystone  Ins.  Co.,  413 
Hartwell  v.  California  Ins.  Co.,  183 
Hastings  v.  Brooklyn  L.  Ins.  Co.,  117 
Hatch  v.  Mutual  L.  Ins.  Co.,  446 
v.  New  Zealand  Ins.  Co.,  175 

Hathaway  v.  Orient  Ins.  Co.,  353 
Hathorn  v.  Germania  Ins.  Co.,  302 
Haupt  v.  Phoenix,  etc.,  Ins.  Co.,  398 
Havens  v.  Germania  F.  Ins.  Co., 

335,  364 

v.  Home  Ins.  Co.,  228 

Haws  v.  St.  Paul,  etc.,  Ins.  Co.,  187 
Hay  v.  Star  F.  Ins.  Co.,  298 

Hayden  v.  Pierce,  360 

Hayes  v.  Milford,  etc.,  F.  Ins. 

Co.,  44,  223,  347 

Haynie  v.  Knights  Templars', 

etc.,  Co.,  412 

Hays  v.  Lapeyre,  53 

Hayward  v.  Liverpool,  etc.,  Ins. 

Co.,  211 

Hazen  v.   Massachusetts,   etc., 

Ins.  Co.,  387 

Head  v.  Providence  Ins.  Co.,  32 
Healey  v.  Mutual  Ace.  Ass'n, 

15,  29,  430,  434 

Healy  v.  Insurance  Co.,  301,  304 
Heath  v.  Springfield,  etc.,  Ins. 

Co.,  133 

Hebner  v.  Sun  Ins.  Co.,  255 

Heffron  v.  Kittanning  Ins.  Co.,    212 


Heilmann  v.  Westchester  Ins. 

Co.,  355 

Heiman   v.   Phoenix  M.   L.   Ins. 

Co.,  31,  35 

Heinlein  v.  Imperial  L.  Ins.  Co.,     56 
Heller  v.  Royal  Ins.  Co.,  471 

Helmetag  v.  Miller,  56,  58,  67 

Hening  v.  U.  S.  Ins.  Co.,  33 

Hennessey  v.  Manhattan  F.  Ins. 

Co.,  171 

Henry  y.  Allen,  463 

Herald  Co.  v.  Northern  Assur. 

Co.,  174 

Herkimer  v.  Rice,  41,  47,  221 

Hermann  v.  Niagara  F.  Ins.  Co., 

136,  137,  300,  301 
Hermany  v.  Fidelity,  etc.,  Ass'n, 

106,  107 

Heron  v.  Phoenix  Ins.  Co.,  284 

Herrick  v.  Union  M.  F.  Ins.  Co., 

95,  96 
Herrman  v.  Adriatic  F.  Ins.  Co., 

288,  289 

v.  Merchants'  Ins.  Co.,  288 

Hess  v.  Preferred,  etc.,  Ass'n,     436 
Heuer  v.  Northwestern,  etc.,  Ins. 

Co.,  211 

Heusinkveld  v.  St.  Paul,  etc., 

Ins.  Co.,  319 

Hewins  v.  Baker,  407,  408 

Hewitt  v.  Watertown  F.  Ins.  Co.,  181 
Hewlett  v.  Home,  etc.,  403 

Hey  v.  Guarantors',  etc.,  Co.,        213 
Heydorf  v.  Conrack,  394 

Hibernia  Ins.  Co.  v.  O'Connor,     173 
Hickerson  v.  German,  etc.,  Ins. 

Co.,  331,  344,  347,  352 

Hicks  v.  British  Amer.  Assur. 

Co.,  31,  322 

Higbie  v.  Guardian,  etc.,  Ins. 

Co.,  424 

Higgins  v.  Phoenix  M.  L.  Ins. 

Co.,  79 

Hill  v.  London  Assur.  Corp.,         307 
Hilliard  v.  Sanford,  66 

Hill   v.   Middlesex,   etc.,   Assur. 

Co.,  171,  241,  259 


TABLE    OF    CASES. 


XXX111 


[References  are  to  Pages.} 


Hillier  v.  Allegheny,  etc.,  Ins. 

Co.,  194,  196 

Hinckley  v.  Germania  F.  Ins. 

Co.,  26,  170,  237 

Hinman  v.  Hartford  F.  Ins.  Co.,  203 
Hirschl  v.  Clark,  394 

Hiscock  v.  Harris,  349 

Hitchcock  v.  Northwestern  Ins. 

Co.,  171 

v.  Sawyer,  33 

Hoadley  v.  Purifoy,  22 

Hobkirk  v.  Phoenix  Ins.  Co.,  332 
Hoeft  v.  Supreme  Lodge,  392,  393 
Hoffecker  v.  New  Castle,  etc., 

Ins.  Co.,  233,  317 

Hoffman  v.  ./Etna  F.  Ins.  Co., 

267,  269,  276 

v.  Hancock,  etc.,  Ins.  Co.,         114 

v.  Hoke,  58 

v.  Michigan,  etc.,  Ass'n,  449 

Hogan,  In  re,  129 

Hogue  v.  Minnesota  Pack.,  etc., 

Co.,  60,  405 

Holbrook  v.  Baloise  F.  Ins.  Co.,   222 
v.  St.  Paul,  etc.,  Ins.  Co.,   188,  189 
Holdom  v.  Ancient  Order,  etc.,     391 
Holland  v.  Taylor,  394 

Hollingsworth  v.  Germania,  etc., 

Ins.  Co.,  302 

Hollis  v.  State  Ins.  Co.,  134,  149 
Holman  v.  Continental  L.  Ins. 

Co.,  118 

Holmes  v.  Charlestown,  etc.,  Ins. 

Co.,  177,  216 

v.  Thomason,  137 

v.  Gilman,  52,  115 

Hollowell  v.  Life  Ins.  Co.,  399 

Home  Ben.  Ass'n  v.  Sargent,        417 

Home,  etc.,  Ins.  Co.  v.  Hauslein, 

43,  276 

v.  Roe,  185 

Home  F.  Ins.  Co.  v.  Collins,          265 
v.  Fallen,  156 

v.  Hammang,  145 

v.  Johansen,  170,  254 

v.  Kuhlman,  121,  137 


Home    Ins.    Co.    v.    Baltimore 

Warehouse  Co.,  177,  221 

v.  Bethel,  261 

v.  Boyd,  289 

v.  Daubenspeck,  121 

v.  Feyerabend,  168 

v.  Gibson,  48 

v.  Gwathmey,  216 

v.  Hancock,  156 

Home  Ins.  Co.  v.  Heck,  300 

v.  Mendenhall,  40,  41,  158 

v.  Scales,  291 

v.  Sylvester,  358 

"  v.  Wood,  286 

Hong  Sling  v.  Insurance  Co.,        361 

Hood  v.  Hartshorn,  349 

Hooker  v.  Sugg,  388 

Hooper  v.  Accidental,  etc.,  Ins. 

Co.,  447 

v.  California,  21 

v.  Hudson  River  F.  Ins.  Co.,    176 

v.  Robinson,  42 

Hoose  v.  Prescott  Ins.  Co., 

92,  160,  264 

Hope,  etc.,  Ins.  Co.  v.  Weed,  119 

Hopkins   v.    Northwestern    L. 

Assur.  Co.,  391,  414 

v.  Phoenix  Ins.  Co.,  303 

Horridge  v.  Dwelling  House  Ins. 

Co.,  222 

Horsch  v.  Dwelling  House  Ins. 

Co.,  49 

Horton  v.  Home  Ins.  Co.,  257 

Hosford  v.  Germania  F.  Ins.  Co., 

76,  95 
Hosmer  v.  St.  Joseph,  etc.,  Ins. 

Co.,  358 

v.  Welch,  66 

Hotchkiss  v.  Phoenix  Ins.  Co.,      286 
Houghton  v.  Manufacturers',  etc., 

Ins.  Co.,  87,  96,  98,  234 

Houghton,  Ex  parte,  47 

Hoven    v.    Employers',    etc., 

Assur.  Corp.,  452,  455 

Howard,  etc.,  Ins.  Co.  v.  Cornick,  203 

Howard  Ins.  Co.  v.  Hocking,        352 

v.  Owen,  32 


XXXIV 


TABLE   OF    CASES. 


[References 

Howell  v.  Baltimore  Eq.  Soc.,      234 
v.  Knickerbocker  L.  Ins.  Co., 

112,  118 
Hubbard  v.  Hartford  F.  Ins.  Co., 

174,  225 

v.  Mutual,  etc.,  Ass'n,  425 

v.  Stapp,  390 

Huck  v.  Globe  Ins.  Co.,  213,  214 

Huckins  v.  People's,  etc.,  Ins. 

Co.,  180 

Hughes  v.  Insurance  Co.,  222 

Hull  v.  Northwestern,  etc.,  Ins. 

Co.,  115 

Humphreys   v.   National   Ben. 

Ass'n,  447 

Hunt  v.  Fidelity  &  Cas.  Co., 

88,  95,  464 
v.  New  Hampshire,  etc.,  Ass'n, 

19,  376 

Hunter  v.  Scott,  384 

Kurd  v.  Doty,  51,  61 

Hutchcraft  v.  Travelers'  Ins.  Co., 

441,  442 
Hutchinson  v.  Liverpool,  etc., 

Ins.  Co.,  336,  338 

v.  Supreme  Tent  Co.,  447 

v.  Western  Ins.  Co.,  226 

Hynds  v.  Schenectady,  etc.,  Ins. 

Co.,  216 


Idaho,   etc.,   Co.   v.   Fireman's 

Fund  Ins.  Co.,  35 

Ikeller  v.  Hartford  F.  Ins.  Co.,  303 
Illinois,  etc.,  Ins.  Co.  v.  Fix,  228,  276 
Illinois  Mut.  F.  Ins.  Co.  v.  Andes 

Ins.  Co.,  18 

Imboden  v.  Detroit,  etc.,   Ins. 

Co.,  174 

Imperial   F.   Ins.   Co.   v.   Coos 

County,  43,  171,  239 

v.  Dunham, 

45,  152,  242,  243,  276,  278 
v.  Home  Ins.  Co.,  18,  19 

v.  Kiernan,  107 

v.  Murray,  48 


are  to  Pages.  ] 

Improved   Match  Co.   v.   Michi- 
gan, etc.,  Ins.  Co.,  232 

Independent,  etc.,  Ins.  Co.  v.  Ag- 

new,  210 

Independent  School  Dist.  v.  Fi- 
delity Ins.  Co.,  158 

Indiana  Ins.  Co.  v.  Hartwell, 

131,  134,  136 

Ingersoll  v.  Knights,  etc.,  416 

Insurance  Co.  v.  Bailey,       40,  55,  62 
v.  Boykin,  314 

v.  Brim,  174 

v.  Colt,  32,  36 

v.  Coombs,  205,  292 

v.  Foley,  420 

v.  Fox,  412 

v.  Garland,  170,  171 

v.  Haven,  42,  247,   251 

v.  Hope,  323 

v.  Leslie,  75,  335 

v.  Luchs,  65 

v.  Mahone,  143,  161 

v.  McDowell,  170 

v.  Mowry,  93 

v.  Norton,  137,  139,  200 

v.  Osborn,  205 

v.  Raden,  301 

v.  Rodel,  310,  415 

v.  Saindon,  245 

v.  Stinson,  46,  47 

v.  Thompson,  47 

v.  Tweed,  211 

v.  Weides,  326 

v.  Wicker,  171,  245,  246 

v.  Wilkinson,        137,  143,  145,  161 

Ionia  Co.  Saving  Bank  v.  Mc- 
Lean, 390 

Ionia,  etc.,  Ins.  Co.  v.  Otto,  124 

Irving  v.  Manning,  27 

Isaacs  v.  Royal  Ins.  Co.,  174 


Jackson  v.  Fidelity,  etc.,  Co.,        360 
v.  Massachusetts  Mut.  F.  Ins. 

Co.,  43,  224 

Jackson  Bank  v.  Williams,  389 


TABLE    OF    CASES. 


XXXV 


[References 

Jacobs  v.  Equitable  Ins.  Co.,  171 
v.  Omaha  L.  Ass'n,  116 

Jaeckel  v.  American,  etc.,  Indem. 

Co.,  452 

James  v.  Mutual,  etc.,  Ass'n,  402 
James  River  Ins.  Co.  v.  Merritt,  184 
Jamison  v.  State  Ins.  Co.,  162 

Jarvis   v.   Northwestern,   etc., 

Ass'n,  310 

Jauvrin   v.   Rockingham,   etc., 

Ins.  Co.,  234 

Jecko  v.  St.  Louis,  etc.,  Ins.  Co.,  275 
Jefferson  Ins.  Co.  v.  Cotheal,  91,  92 
Jeffries  v.  Life  Ins.  Co.,  89,  426 

Jennings  v.  Chenango,  etc.,  Ins. 

Co.,  171,  237 

Jersey  City  Ins.  Co.  v.  Nichol,  224 
Jinks  v.  Banner  Lodge,  394 

Johannes  v.  Phenix  Ins.  Co.,  377 
v.  Standard  Fire  Office,  247 

Johansen  v.  Home  F.  Ins.  Co.,  170 
John  Davis  &  Co.  v.  Insurance 

Co.,  168,  194,  195 

John  Hancock,  etc.,  Ins.  Co.  v. 

Warren,  104 

John  R.  Davis  Lumber  Co.  v. 
Hartford    F.    Ins.    Co., 

135,    299,    302 
Johns   v.    Northwestern,    etc., 

Ass'n,  417 

Johnson  v.  American  Ins.  Co.,  227 
v.  Connecticut  F.  Ins.  Co.,  295 
v.  Humboldt  Ins.  Co.,  361 

v.  Knights  of  Honor,  385 

v.  London  Guar.,  etc.,  Co.,       438 
v.  Northwestern  Mut.  Life  Ins. 

Co.,  20 

v.  Norwalk  F.  Ins.  Co.,  285 

v.  Phoenix  Ins.  Co.,  320 

v.  Travelers'  Ins.  Co.,  443 

v.  Van  Bpps,  386 

Johnston  v.  Northwestern,  etc., 

Ins.  Co.,  104 

v.  West  Scotland  Ins.  Co.,        194 

Joliffe  v.  Madison  Mut.  Ins.  Co.,  113 

Jones  v.  Brooklyn  L.  Ins.  Co.,     102 

v.  Insurance  Co.,  122 


are  to  Pages.} 

Jones  v.  Phoenix  Ins.  Co.,  268 

v.  Preferred,  etc.,  Assur.  Co., 

113,  125,  126 
v.  United  States,  etc.,  Ass'n, 

438,   442,   444,   447 
Jory  v.  Supreme  Council,  394 

Joyce  v.  Maine  Ins.  Co.,  170 

Judge   v.   Connecticut  F.   Ins. 

Co.,  245,   253,   256,   263 


K 


Kahn  v.  Traders'  Ins.  Co.,  226,  313 
Kahnweiler  v.  Phenix  Ins.  Co., 

316,  337 

Kansas  City,  etc.,  R.  Co.  v.  South- 
ern R.  News  Co.,  452 
Karelsen  v.  Sun  Fire  Office,  31 
Karthaus  v.  Ferrer,  342 
Kasten  v.  Interstate  Cas.  Co.,  434 
Kausal  v.  Minnesota,  etc.,  Ins. 

Ass'n,  129,  141,  143,  200 

Keefe  v.  National  Ace.  Soc.,  438 
Keeler  v.  Niagara  F.  Ins.  Co.,  267 
Keels  v.  Mutual,  etc.,  Ass'n,  417 
Keene  v.  New  England,  etc., 

Ass'n,  439 

Keener  v.  Grand  Lodge,  384 

Keith  v.  Quincy,  etc.,  Ins.  Co.,     287 
Kelly  v.  Mutual  L.  Ins.  Co.,          412 
v.  Sun  Fire  Office,  320 

Kempton  v.  State  Ins.  Co.,  261 

Kendrick  v.  Mutual,  etc.,  Ins. 

Co.,  399 

Kennedy  v.  New  York  Life  Ins. 

Co.,  28 

Kenton  Ins.  Co.  v.  Downs,  316 

v.  Shea,  226 

v.  Wigginton,  70,  107 

Kentucky,  etc.,  Ins.  Co.  v.  Hamil- 
ton, 62 
v.  Franklin,                          435,  437 
Kentzler  v.  American,  etc.,  Ace. 

Ass'n,  311,  458 

Kenyon  v.  Knights  Templars', 

etc.,  Ass'n,  114,  160,  418 

Kerman  v.  Howard,  390 


XXXVI 


TABLE   OF    CASES. 


[References  are  to  Pages.] 


Kernochan  v.  New  York,  etc., 

Ins.  Co.,  380 

Kerr  v.  Minnesota,  etc.,  Ass'n, 

413,  419 

Key  v.  Des  Moines  Ins.  Co.,          162 
v.  National  L.  Ins.  Co.,  Ill 

Keyser  v.  Hartford  F.  Ins.  Co.,    223 
Keystone  Mut.   Ben.  Ass'n  v. 

Norris,  59 

Kidder  v.  Knights  Templars,  etc., 

Co.,  402 

Kimball  v.  ^Etna  Ins.  Co.,  97 

v.  Howard  F.  Ins.  Co.,  312 

v.  Monarch  Ins.  Co.,  254 

King  v.  State,  etc.,  Ins.  Co.,  46 

v.  Watertown  F.  Ins.  Co.,         361 

Kingsley  v.  New  England,  etc., 

Ins.  Co.,  312 

Kister  v.  Lebanon  Mut.  Ins.  Co., 

142,  156,  162 

Kitchen  v.  Hartford  F.  Ins.  Co.,  152 
Kitterlin  v.  Milwaukee,  etc.,  Ins. 

Co.,  266 

Kitts  v.  Massasoit  Ins.  Co.,          266 
Klein  v.  Insurance  Co.,  113 

Kline  v.  National  Ben.  Ass'n,        410 
Klosterman  v.  Germania  L.  Ins. 

Co.,  107 

Knapp    v.    Homeopathic,    etc., 

Ins.  Co.,  118 

v.  Preferred,  etc.,  Ass'n,  436 

Knecht  v.  Mutual  L.  Ins.  Co.,        96 
Knickerbocker  Ins.  Co.  v.  Mc- 

Ginnis,  312 

Knickerbocker  L.  Ins.  Co.  v.  Pen- 

dleton,  116 

Knight  v.  Eureka,  etc.,  Ins.  Co.,   224 
Knights  of  Honor  v.  Dickson,      426 
v.  Watson,  393 

Knights  of  Pythias  v.  Cogbill,      133 
Knights  Templars,  etc.,  Co.  v. 

Jarman,  412 

Knop  v.  National  F.  Ins.  Co.,        206 
Knox  v.  Rossi,  33 

Knudson  v.  Hekla  F.  Ins.  Co.,     141 
Kocher  v.  Supreme  Council,        127 


Koehler  v.  Centennial,  etc.,  Ins. 

Co.,  384 

Kooistra  v.  Rockford  Ins.  Co.,     301 
Koontz  v.  Hannibal,  etc.,  Ins. 

Co.,  203 

Koshland  v.  Home,  etc.,  Ins.  Co., 

245,  264 

Kowicz  v.  Teutonia  Ins.  Co.,         315 
Krause  v.  Equitable  L.  Assur. 

Co.,  115 

Kronk  v.  Birmingham  F.  Ins. 

Co.,  47 

Krug  v.  German  F.  Ins.  Co.,         170 
Kruger  v.   Western,  etc.,   Ins. 

Co.,  152 

Kunzze  v.  American,  etc.,  Ins. 

Co.,  176,  192 

Kyte  v.  Commercial  Union  Assur. 

Co.,  140,  171,  237 

L 

La  Belle  v.  Norwich  F.  Ins.  Soc.,  201 
Lackey  v.  Georgia  Home  Ins. 

Co.,  224 
Laclede,  etc.,  Co.  v.  Hartford, 

etc.,  Ins.  Co.,  15 

Ladd  v.  ^tna  Ins.  Co.,  231 

Laird  v.  Littlefield,  255 

Lake  v.  Farmers'  Ins.  Co.,  322 

Lake  Erie,  etc.,  R.  Co.  v.  Falk,  375 

Lakings  v.  Phoenix  Ins.  Co.,  190 

Lambert  v.  Penn,  etc.,  Ins.  Co.,  389 
Lamberton    v.    Connecticut    F. 

Ins.  Co.,  143 

Lament  v.  Grand  Lodge,  393 

Lampkin  v.  Travelers'  Ins.  Co.,  67 

Lancashire  Ins.  Co.  v.  Callahan,  460 
Lancaster   F.    Ins.    Co.   v.   Len- 

heim,                                  168,  281 
Lancaster  Mills  v.  Merchants', 

etc.,  Co.,  177 

Lancey  v.  Phoenix  F.  Ins.  Co.,  298 

Landers  v.  Cooper,  177 

Landes  v.  Safety,  etc.,  Ins.  Co.,  131 
Lane  v.  Maine,  etc.,  Ins.  Co., 

43,  171,  261 

v.  St.  Paul,  etc.,  Ins.  Co.,  319 


TABLE    OF    CASES. 


XXXV11 


[.References  are  to  Pages.] 


Langan  v.  ^Etna  Ins.  Co., 

306,   356,   357 

Langdale  v.  Mason,  208 

Langdon    v.    Minnesota,    etc., 

Ass'n,  266 

v.  Union,  etc.,  Ins.  Co.,  383 

Lange,  Re,  395 

Langworthy  v.  Oswego,  etc.,  Ins. 

Co.,  174 

v.  Washburn,  etc.,  Co.,      119,  124 
L'Anse  v.  Fire  Ass'n,  187,  190 

Lantz  v.  Vermont  L.   Ins.   Co., 

117,  125 

Larkin  v.  Glens  Falls  Ins.  Co.,  368 
Laselle  v.  Hoboken  F.  Ins.  Co.,  171 
Lasher  v.  Northwestern,  etc., 

Ins.  Co.,  352 

La  Solidarite",  etc.,  Ass'n,  In  re,  122 
Lavigne  v.  Ligue  des  Patriotes, 

384,  385 
Lawrence  v.  National  F.   Ins. 

Co.,  25 

Lazarus  v.  Commonwealth  Ins. 

Co.,  275 

Leadbetter  v.  ^Etna  Ins.  Co.,        320 

Leavitt  v.  Canadian,  etc.,  R.  Co.,  373 

Lebanon,  etc.,  Ins.  Co.  v.  Erb,      243 

v.  Hoover,  155 

v.  Kepler,  221,  372 

v.  Leathers,  230,  231 

Lee  v.  Agricultural  Ins.  Co.,          204 

v.  Union,  etc.,  Ins.  Co.,  396 

Leggett  v.  ^Etna  Ins.  Co.,  234 

Leiber  v.  Liverpool,  etc.,  Ins. 

Co.,  209 

Leinkauf  v.  Caiman,  278 

Leman  v.  Manhattan  L.  Ins.  Co., 

412,  417 

Lemon  v.  Phrenix,  etc.,  Ins.  Co.,  65 
Lennon  v.  Metropolitan  L.  Ins. 

Co.,  384 

Leonard  v.  American  Ins.  Co.,      150 

v.  Orient  Ins.  Co.,  214 

Leslie  v.  French,  115 

Lesure  Lumber  Co.  v.  Mutual 

F.  Ins.  Co.,  336,  338 

Lett  v.  Guardian  F.  Ins.  Co.,   26,  275 


Levie  v.  Metropolitan  L.   Ins. 

Co.,  105 

Levine  v.  Lancashire  Ins.  Co., 

339,  349,  350 

Levy  v.  Magnolia  Lodge,  334 

Lewis  v.  Eagle  Ins.  Co.,  100 

v.  Metropolitan  L.  Ins.  Co.,      385 

v.  New  England  F.  Ins.  Co.,     252 

v.  Springfield,  etc.,  Ins.  Co.,     194 

Life  Ins.  Clearing  Co.  v.  O'Neill,  63 

Life  Ins.  Co.  v.  Terry,  414,  415 

Lightbody  v.  North  Amer.  Ins. 

Co.,  35 

Limburg  v.  German  F.  Ins.  Co., 

286,  289 

Lindenau  v.  Desborough,  72 

Lindley  v.  Orr,  378 

v.  Union  Farmers',  etc.,  Ins. 

Co.,  224 

Linscott  v.  Orient  Ins.  Co.,  107 

Lipman  v.  Niagara  F.  Ins.  Co., 

31,  303 

Lippman  v.  -(Etna  Ins.  Co.,  226 

Liscom  v.  Boston,  etc.,  Ins.  Co.,  228 
List  v.  Commonwealth,  131 

Litch  v.  North  British,  etc.,  Ins. 

Co.,  292 

Lithgow  v.  Supreme  Tent,  etc.,   426 
Liverpool,  etc.,  Ins.  Co.  v.  Buck- 
staff,  285 
v.  Cockran,  250 
v.  Creighton,  209 
v.  Ende,                                         214 
v.  Goehring,                                  342 
v.  Gunther,                                  279 
v.  Kearney,                 168,  326,  327 
Lobdill  v.  Laboring  Men's,  etc., 

Ass'n,  447 

Lockwood  v.  Michigan,  etc.,  Ins. 

Co.,  389 

v.  Middlesex,  etc.,  Assur.,  Co., 

269,  286,  295 

Lodge  v.  Capital  Ins.  Co.,  271 

Loehner  v.  Home,  etc.,  Ins.  Co.,  203 
Lohnes  v.  Insurance  Co.,  134,  146 
London  Assur.  v.  Mansel,  72,  79 
London  Assur.  Corp.  v.  Paterson,  370 


XXXV111 


TABLE    OF    CASES. 


[References 
London  Guarantee  Co.  v.  Fearn- 

ley,  319 

London,  etc.,  Ins.  Co.  v.  Fischer,  306 

v.  Gerteson,  131,  251 

v.  Turnbull,  300,  372 

Longhurst  v.  Star  Ins.  Co.,  46 

Longueville  v.  Western  Assur. 

Co.,  189,  192 

Loomis  v.  Eagle,  etc.,  Ins.  Co., 

40,  55,  66 

v.  Rockford  Ins.  Co.,  202 

Looney  v.  Looney,  46 

Loos  v.  John  Hancock,  etc.,  Ins. 

Co.,  385 

Lord  v.  American,  etc.,  Ass'n,      447 

v.  Ball,  12,  43,  51,  66 

Louck  v.  Orient  Ins.  Co.,  230 

Lounsbury  v.   Protection   Ins. 

Co.,  170 

Lovelace    v.    Travelers'    Prot. 

Ass'n,  429,  441,  443 

Loventhal  v.  Home  Ins.  Co.,  45 

Lovewell  v.  Westchester  F.  Ins. 

Co.,  175,  182,  216 

Loy  v.  Home  Ins.  Co.,  263 

Luce  v.  Dorchester,  etc.,   Ins. 

Co.,  230,  238 

Lucena  v.  Craufurd,  40,  42 

Lum  v.  United  States  F.  Ins. 

Co.,  294 

Lumbermen's,  etc.,  Ins.  Co.  v. 

Bell,  131,  315 

Luthe  v.  Farmers',  etc.,  Ins.  Co.,  185 
Lutz  v.  Metropolitan  L.  Ins.  Co.,  108 
Lycoming  F.  Ins.  Co.  v. 

Schwenk,  207 

Lyman  v.  State,  etc.,  Ins.  Co., 

171,  241,  303 

Lynch  v.  Dalzel,  26,  41 

v.  Dunsford,  80 

Lynn  v.  Burgoyne,  36 

Lynn,  etc.,  Co.  v.  Meriden  F.  Ins. 

Co.,  198 

Lyon  v.  Railway,  etc.,  Assur. 

Co.,  447 

v.  Travelers'  Ins.  Co.,  114 


are  to  Pages.'] 
Lyons  v.  Providence,  etc.,  Ins. 

Co.,  187,  189 

M 

Mack  v.  Rochester,  etc.,  Ins.  Co.,  240 
Mackenzie  v.  Whitworth,  70 

Mactier  v.  Frith,  37 

Madeira's  Appeal,  391 

Maher  v.  Hibernia  F.  Ins.  Co.,      206 
Maier  v.  Fidelity,  etc.,  Ass'n, 

143,  152 

Maisel  v.  Fire  Ass'n,  183 

Malicki  v.  Chicago,  etc.,  Soc., 

103,  420 
Mallette  v.  British  Am.  Assur. 

Co.,  396 

Malley  v.  Atlantic,  etc.,  Ins.  Co.,   268 

Mallory  v.  Farmers'  Ins.  Co.,         245 

v.  Travelers'  Ins.  Co.,        416,  431 

Manchester   F.   Assur.    Co.    v. 

Abrams,  248 

v.  Feibelman,  176 

v.  Insurance  Co.,        300,  304 

v.  Koerner,  348 

Mandego    v.    Centennial,    etc., 

Ass'n,  124 

Manhattan,  etc.,  Ins.  Co.  v.  My- 
ers, 114,  399 
Manhattan  Ins.  Co.  v.  Webster,      48 
Manhattan  L.  Ins.  Co.  v.  Brough- 

ton,  415 

v.  Hennessey,  55,  58 

v.  Smith,  119 

v.  Willis,  80 

ivlanson  v.  Grand  Lodge,  125 

v.  Phoanix  Ins.  Co.,  46 

Manton  v.  Robinson,  409 

Manufacturers',  etc.,  Indem.  Co. 

v.  Dorgan,  430,  431,  437,  438,  441 
Manufacturers',   etc.,   Ins.   Co. 

v.  Zeitinger,  101,  317,  318 

Manufacturers'  L.  Ins.  Co.  v.  Anc- 

til,  69,  410 

Marcoux  v.  Society,  etc.,  403 

Marcus  v.  St.  Louis,  etc.,  Ins. 

Co.,  406 


TABLE    OF    CASES. 


XXXIX 


[.References  are  to  Pages.'] 


Maril  v.  Connecticut  F.  Ins.  Co., 

280,  282 

Marks  v.  Hamilton,  48 

Marsh  v.  Supreme  Council,  390 

Marskey  v.  Turner,  116 

Marthinson  v.  North  British,  etc., 

Ins.  Co.,  151 

Martin  v.  JEtna,  etc.,  Ins.  Co.,      384 
v.  Capital  Ins.  Co.,  234,  235 

v.  Farmers'  Ins.  Co.,  177 

v.  Franklin  F.  Ins.  Co.,  278 

v.  Jersey  City  Ins.  Co.,  297 

v.  Manufacturers',  etc.,  Co.,      430 
v.  State  Ins.  Co.,  243 

v.  Stubbings, 

56,  60,  390,  391,  393,  394,  403 

v.  Tradesmen's  Ins.  Co.,  173 

v.  Travelers'  Ins.  Co.,  430 

Marvin  v.  Universal  L.  Ins.  Co.,   141 

Maryland,  etc.,  Ins.  Co.  v.  Kim- 

mel,  355 

Maryland  F.  Ins.  Co.  v.  Gusdorf,  189 
Mascott  v.  First  Nat'l  F.  Ins. 

Co.,  249 

Mason  v.  St.  Paul,  etc.,  Ins.  Co., 

313,  316 

Masonic  Aid  Ass'n  v.  Jones,          426 
Masonic,  etc.,  Soc.  v.  Burkhart, 

390,  392,  394 

Massachusetts,  etc.,  Ass'n  v.  Rob- 
inson, 69,  410,  421 
Massasoit  Steam  Mills  Co.  v. 

Western  Assur.  Co.,  300 

Massell  v.  Protective,  etc.,  Ins. 

Co.,  175 

Mathers  v.  Union,  etc.,  Ass'n,      133 
Matthews  v.  American,  etc.,  Ins. 

Co.,  21,  168,  312,  315 

v.  Insurance  Co.,  113 

Mawhinney  v.  Southern  Ins.  Co., 

187,  190 
McAllaster  v.  Niagara  F.  Ins. 

Co.,  150,  318 

McAllister  v.  New  England,  etc., 

Ins.  Co.,  116 

McBryde  v.  South  Carolina,  etc., 

Ins.  Co.,  227,  321 


McCann  v.  Metropolitan  L.  Ins. 

Co.,  68 

McCarthy  v.  Supreme  Lodge,  66,  384 
v.  Travelers'  Ins.  Co.,  430 

McCarty  v.  New  York  L.  Ins. 

Co.,  160 

McCarvel  v.  Phenix  Ins.  Co.,        321 
McCluer  v.  Girard,  etc.,  Ins.  Co., 

188,  189 
McComb  v.  Council  Bluffs  Ins. 

Co.,  162 

McConnell   v.   Provident,   etc., 

Ass'n,  399 

McCoubray  v.  St.  Paul,  etc.,  Ins. 

Co.,  322 

McCoy  v.  Iowa,  etc.,  Ins.  Co., 

102,  248 

v.  Roman  Cath.,  etc.,  Ins.  Co.,   127 
McCready  v.  Hartford  F.  Ins. 

Co.,  370 

McCulloch  v.  Eagle  Ins.  Co.,  37 

McCullough  v.  Hartford  F.  Ins. 

Co.,  297 

v.  Phrenix  Ins.  Co.,  352 

McDermott  v.  Centennial,  etc., 

Ass'n,  384 

McDonald  v.  Arnout,  342 

v.  Black,  26,  27 

v.  Provident,  etc.,  Assur.  Soc., 

114,  397 
McDougall   v.   Provident,   etc., 

Soc.,  110 

McElroy  v.  British  Amer.  Assur. 

Co.,  137 

v.  Continental  Ins.  Co.,  361 

v.  John   Hancock,   etc.,   Ins. 

Co.,  314 

McFarland  v.  Kittanning  Ins. 

Co.,  154 

McGannon  v.  Michigan,  etc.,  F. 

Ins.  Co.,  92,  96,  106 

McGlinchey  v.  Fidelity,  etc.,  Co., 

431,  436 
McGlother  v.  Provident,  etc.,  Ace. 

Co.,  433 

McGowan  v.  People's,  etc.,  Ins. 

Co.,  203 


xl 


TABLE   OF    CASES. 


[References 
McGraw  v.  Germania  F.  Ins.  Co.,    , 

324,  325 

v.  Metropolitan  L.  Ins.  Co.,        66 
McGurk  v.  Metropolitan  L.  Ins. 

Co.,  145 

Mclntire  v.  Norwich  P.  Ins.  Co.,  257 
Mclntyre  v.  Michigan,  etc.,  Ins. 

Co.,  116 

McKay  v.  New  York  L.  Ins.  Co.,  122 
McKelvy  v.  German,  etc.,  Ins. 

Co.,  222 

McKenna  v.  State  Ins.  Co.,  120 

McKenzie  v.  Scottish,  etc.,  Ins.,  231 
McKibban  v.  Des  Moines  Ins.  Co., 

246,  264,  317 
McLaughlin  v.  Atlantic  Mut.  Ins. 

Co.,  87 

v.  Equitable   L.   Assur.    Soc.,     31 

v.  McLaughlin,  394 

McLoon  v.  Commercial  Ins.  Co.,    102 

McMahon  v.  Supreme  Tent,  etc.,  113 

v.  Travelers'  Ins.  Co.,  114 

McMaster  v.  Insurance  Co.,    310,  371 

v.  New  York  L.  Ins.  Co., 

93,  110,  115,  129,  143,  400 
McNally  v.  Phoenix  Ins.  Co., 

151,  314,  339 

McNeil  v.  United  Order,  390 

McQueeny  v.  Phoenix  Ins.  Co.,  202 
McQuillan  v.  Mutual,  etc., 

Ass'n,  404 

McQuitty  v.  Continental  L.  Ins. 

Co.,  118 

McStea  v.  Matthews,  21 

McVey  v.  Grand  Lodge,  90 

Meacham   v.   New   York,   etc., 

Ass'n,  419 

Mead  v.  Northwestern  Ins.  Co.,  171 
Mears  v.  Humboldt  Ins.  Co.,  235 
Mechanics',  etc.,  Ins.  Co.  v. 

Floyd,  327 

v.  Rion,  147 

Mechanics'  Ins.  Co.  v.  Hodge,      237 
Mechanics'  Sav.  Bank  v.  Guar- 
antee Co.,  15 
Mechanics'  Sav.  Bank  &  T.  Co. 

v.  Guarantee  Co.,  459,  464 


are  to  Pages.] 
Medina  v.  Builders',  etc.,  Ins. 

Co.,  180,  183 

Mengel  v.  Northwestern,  etc., 

Ins.  Co.,  420 

Menneiley  v.  Employers',  etc., 

Assur.  Corp.,  433,  436 

Mente  v.  Townsend,  392 

Mentz  v.  Armenia  F.  Ins.  Co.,     342 
Mercantile   Cred.,   etc.,   Co.   v. 

Littleford,  466 

v.  Wood,  17,  466,  469 

Mercantile  F.  Ins.  Co.  v.  Calebs,  376 
Merchants',  etc.,  Co.  v.  Lacroix,   149 
Merchants'  Ins.  Co.  v.  Nowlin,      321 
v.  Stephens,  334 

Merrill  v.  Agricultural,  etc.,  Ins. 

Co.,  202 

Merserau  v.  Phoenix,  etc.,  Ins. 

Co.,  153 

Merwin  v.  Star  F.  Ins.  Co.,  179 

Messelback  v.  Norman,  139,  143 

Mesterman  v.  Home  Mut.  Ins. 

Co.,  144,  158 

Methvin  v.  Fidelity,  etc.,  Ass'n,   396 
Metropolitan  Ace.  Ass'n  v.  Froi- 

land,  433,  434 

Metropolitan,  etc.,  Ass'n  v.  Bris- 
tol, 430 
Metropolitan    L.    Ins.    Co.    v. 

Blesch,  122 

v.  Howie,  421 

v.  Larson,  425 

v.  McTague,  163 

v.  O'Brien,  51,  53,  390 

v.  Smith,  67,  122 

Meyer  v.  Fidelity,  etc.,  Co.,   431,  440 
Meyers  v.  Woodmen,  etc.,  423 

Michigan,  etc.,  Co.  v.  State,  etc., 

Ins.  Co.,  159 

Michigan,  etc.,  Ins.  Co.  v.  Leon,   143 
Michigan  Mut.  L.   Ins.  Co.  v. 

Bowes,  116 

Michigan  Pipe  Co.  v.  Michigan, 

etc.,  Ins.  Co.,  155 

Michigan  Sav.,  etc.,  Ass'n  v.  Mis- 
souri, etc.,  Trust  Co.,  460 
Millard  v.  Brayton,                         387 


TABLE    OF    CASES. 


Xli 


[References 

Millaudon  v.  Atlantic  Ins.  Co.,     175 
Miller  v.  Alliance  Ins.  Co.,  45 

v.  American,  etc.,  Ins.  Co.,         438 
v.  Eagle,  etc.,  Ins.  Co.,  28 

v.  German  Ins.  Co.,  273 

v.  Hartford  F.  Ins.  Co.,  361 

v.  Mut.  Ben.  L.  Ins.  Co.,  101 

v.  Union  Cent.  L.  Ins.  Co., 

113,  117,  125 

Mills  v.  Farmers'  Ins.  Co.,    182,  188 
v.  Rebstock,  413 

Milner  v.  Bowman,  394 

Milwaukee,  etc.,  Ins.  Co.  v.  Rus- 
sell, 356,  363 
v.  Schallman,  347 
Minneapolis,    etc.,   Co.   v.    Fire- 
men's Ins.  Co.,  193 
Minneapolis,  etc.,  Ins.  Co.,  In  re,  125 
Minnesota  Title  Ins.,  etc.,  Co.  v. 

Drexel,  16,  471 

Minturn  v.  Manufacturers'  Ins. 

Co.,  278 

Miotke  v.  Milwaukee,  etc.,  Ins. 

Co.,  244 

Missouri,  etc.,  Trust  Co.  v.  Ger- 
man Nat'l  Bank,    88,  89,  100,  460 
Missouri  Valley  L.  Ins.  Co.  v. 

McCrum,  58 

v.  Sturges,  56,  58 

Mitchell  v.  Home  Ins.  Co.,  221 

v.  Potomac  Ins.  Co.,  211,  212 

Moadinger  v.  Mechanics'  F.  Ins. 

Co.,  180,  192,  216,  217 

Mobile,  etc.,  Ins.  Co.  v.  Coleman,  107 
v.  Pruett,  118 

Mog6  v.  Societ6,  etc.,  447 

Moise  v.  Mutual,  etc.,  Ass'n,          406 
Monadnock  R.  Co.  v.  Manufac- 
turers' Ins.  Co.,  181 
Monaghan  v.  Agricultural  F.  Ins. 

Co.,  20 

Monger  v.  Rockingham,  etc.,  Ins. 

Co.,  123 

Monroe,  etc.,  Ass'n  v.  Liverpool, 

etc.,  Ins.  Co.,  168 

Monteleone  v.  Royal  Ins.  Co., 

367,  368 
iv — ELLIOTT  INS. 


are  to  Pages. ] 
Montgomery  v.  American,  etc., 

Ins.  Co.,  333 

v.  Delaware  Ins.  Co.,  190 

v.  Harker,  124 

Moody  v.  Amazon  Ins.  Co.,  286,  290 
Mooney  v.  Howard  Ins.  Co.,          180 
Moore  v.  Phoenix  Ins.  Co.,      171,  287 
v.  Phoenix  Ins.  Co.,  231,  289 

v.  Protection  Ins.  Co.,  325 

v.  Rockford  Ins.  Co.,  117 

More  v.  New  York,  etc.,  Ins.  Co.,  150 
Morotock  Ins.  Co.  v.  Cheek,  321 

v.  Rodefer,  78,   244,    263 

Morrell  v.  Irving  F.  Ins.  Co.,        355 
v.  Trenton  Ins.  Co.,  57 

Morrill  &  Co.  v.  New  England  F. 

Ins.  Co.,  359 

Morris  v.  Dodd,  395 

v.  Georgia  Loan,  etc.,  Ass'n,       54 
v.  State,  etc.,  Assur.  Co.,  414 

Morrison  v.  North  Amer.  Ins. 

Co.,  154 

v.  Tennessee,  etc.,  Ins.  Co.,         70 
v.  Wisconsin,  etc.,  Ins.  Co.,       423 
Mosness  v.  German,  etc.,  Ins.  Co., 

339,  343 
Moulor  v.  American  L.  Ins.  Co., 

80,  91,  93,  421 

Mound  City,  etc.,  Ins.  Co.  v.  Cur- 
ran,  124 
v.  Twining,                                   118 
Mount  v.  Waite,  51 
Mowry  v.  Home  L.  Ins.  Co.,     51,  55 
Moyer  v.  Sun  Ins.  Office,         320,  333 
Mueller  v.  Grand  Grove,         124,  126 
v.  South  Side  F.  Ins.  Co.,          150 
Murphy  v.  American  Ins.  Co.,      367 
.v.  Northern  British,  etc.,  Co., 

325,  335,  348 

v.  Red,  56,  60 

Murray  v.  New  York  L.  Ins.  Co., 

445,  446 
Mutual  Ben.  L.  Ins.  Co.  v.  Robi- 

son,  88, 141,  145,  156 

v.  Ruse,  118 

Mutual,  etc.,  Ass'n  v.  Essender,  119 
v.  Farmer,  399,  422 


xlii 


TABLE    OF    CASES. 


[References 

Mutual,  etc.,  Ass'n  v.  Taylor,  110, 123 
v.  Tuggle,  430 

Mutual,  etc.,  Ins.  Co.  v.  Daviess, 

412,  417,  424,  430,  441 

v.  Hamilton,  405 

v.  Hillyard,  113 

v.  Martin,  387 

Mutual  F.  Ins.  Co.  v.  Coatesville 

Shoe  Factory,  170 

Mutual  L.  Ins.  Co.  v.  Allen, 

28,  56,  60,  403 

v.  Blodgett,  68 

v.  Clancy,  398 

v.  Cohen,  113 

v.  Elliott,  122 

v.  French,  117 

v.  Girard  L.  Ins.  Co.,  115 

v.  Hathaway,  113 

v.  Leubrie,  414 

v.  Wiswell,  414,  417 

Mutual  Reserve,  etc.,  Ass'n  v. 

Payne,  410 

Myers  v.  Keystone,  etc.,  Ins.  Co., 

36,  37 
N 

Nail  v.  Provident  Sav.  L.  Assur. 

Soc.,  Ill 

National,    etc.,    Ace.    Ass'n   v. 

Burr,  332 

National  Bank  v.  Insurance  Co.,    91 

v.  Union  Ins.  Co.,  92,  108 

National  Ben.  Ass'n  v.  Bowman,  444 

v.  Jackson,  114 

National,  etc.,  Co.  v.  Citizens' 

Ins.  Co.,  44 

National  F.  Ins.  Co.  v.  Crane,      278 
National  Fraternity  v.  Karnes, 

420,  424 

National  Home,  etc.,  Ass'n  v. 
Dwelling  House  Ins.  Co., 

336,  338,  339 

National  L.  Ins.  Co.  v.  Minch,        82 
National,  etc.,  Soc.  v.  Lupold,      394 
v.  Taylor,  435 

National  Union  v.  Marlow,  23 

Nave  v.  Home,  etc.,  Ins.  Co.,       214 


are  to  Pages.] 

Nebraska,  etc.,  Ins.  Co.  v.  Seivers,  31 
Newark  F.  Ins.  Co.  v.  Sammons,  136 
Newark  Mach.  Co.  v.  Kenton 

Ins.  Co.,  30,  31,  112,  154 

New    Boston    F.    Ins.    Co.    v. 

Saunders,  119 

Newcomb  v.  Cincinnati  Ins.  Co.,  30 
New  England,  etc.,  Ins.  Co.  v. 

Robinson,  35 

v.  Schettler,  171 

v.  Wetmore,  170,  237,  294 

New  Hampshire  Mut.  F.  Ins.  Co. 

v.  Noyes,  20 

Newman  v.  Covenant,  etc.,  Ins. 

Ass'n,  145 

Newmark  v.  Liverpool,  etc.,  Ins. 

Co.,  210 

New  Orleans  Ins.  Ass'n  v.  Hoi- 
berg,  267 
Newport  Improvement  Co.   v. 

Home  Ins.  Co.,  239 

New  York,  etc.,  Ins.  Co.  v.  Arm- 
strong, 59,  386,  391,  403 
v.  Flack,         386,  403,  405,  406,  407 
v.  Ireland,  390 
v.  Langdon,  216 
v.  McMaster,  400 
v.  Scott,                                           398 
New  York  L.  Ins.  Co.  v.  Davis,       68 
v.  Fletcher,           138,  140,  143,  152 
Niagara  F.  Ins.  Co.  v.  De  Graff,    25 
v.  Elliott,                                        189 
v.  Forehand,                         325,  327 
v.  Heflin,                                         329 
v.  Heenan,                                     185 
v.  Johnson,                                   179 
v.  Scammon,                                 258 
Niblo  v.  North  American  F.  Ins. 

Co.,  70 

Nitsch  v.  American,  etc.,  Ins. 

Co.,  302 

Noble  v.  Mitchell,  130 

Norman  v.  Missouri,  etc.,  Ins. 

Co.,  292 

Norris  v.   Farmers',  etc.,   Ins. 

Co.,  181 

v.  Hartford  F.  Ins.  Co.,  257 


TABLE    OF    CASES. 


xliii 


[References 
North  American,  etc.,  Ins.  Co.  v. 

Burroughs,  429,  431,  436 

v.  Throop,  76 

North  American  F.  Ins.  Co.  v. 

Zaenger,  289 

North  American  L.  Assur.  Co. 

v.  Craigen,  61 

North    Berwick    Co.    v.    New 

England,  etc.,  Ins.  Co.,  232 

Northern  Assur.  Co.  v.  Craw- 
ford, 280 
v.  Grand  View  Bldg.  Ass'n, 

154,  157,  220,  226,  227,  306 
v.  Hanna,  315,  316 

Northrup  v.  Railway  Pass.,  etc., 

Co.,  432 

Northwestern,  etc.,  Ins.  Co.  v. 

Hazelett,  416 

v.  Mize,  329 

v.  Woodward,  70 

Northwestern  Ins.  Co.  v.  Phoenix, 

etc.,  Co.,  359 

Northwestern,  etc.,  L.  Ins.  Co. 

v.  Rochester,  etc.,  Ins.  Co.,    368 
Northwestern  Masonic  Aid  Ass'n 

v.  Jones,  16,  56 

Norton  v.  Phoenix,  etc.,  Ins.  Co.,  36 
Norwich,  etc.,  Ins.  Co.  v.  Well- 
house,  371 
Norwich  F.  Ins.  Co.  v.  Boomer,  75 
Norwood,  Ex  parte,  19 
Noyes  v.  Northwestern,  etc.,  Ins. 

Co.,  188 

v.  Phoanix,  etc.,  Ins.  Co.,  36 

Nurney  v.  Fireman's  Fund  Ins. 

Co.,  336,  337 

Nussbaum  v.  Northern  Ins.  Co., 

47,  221,  263 

Nutter  v.  Taylor,  343 

Nutts  v.  Farmers'  Ins.  Co.,  42 

O 

Oakes  v.  Manufacturers',  etc., 

Ins.  Co.,  162,  266 

Obermeyer  v.  Globe,  etc.,  Ins. 

Co.,  171 

O'Brien  v.  Home  Ins.  Co.,  220 


are  to  Pages.'} 
O'Brien  v.  New  Zealand  Ins.  Co., 

133,  137 

v.  Prescott  Ins.  Co.,  141 

Ogden  v.  East  River  Ins.  Co.,  229 
Ohage  v.  Union  Ins.  Co.,  185,  334 
Ohio,  etc.,  Ins.  Co.  v.  Bevis,  247 

v.  Waters,  272 

O'Leary  v.  Merchants',  etc.,  Ins. 

Co.,  220,  226 

Oldham  v.  Anchor,  etc.,  Ins.  Co.,     267 
Old  Saucelito,  etc.,  Co.  v.  Com- 
mercial Assur.  Co.,  339 
Olmsted  v.  Keyes,               56,  60,  403 
Olney   v.   German   Ins.   Co., 

253,  264,  269 

Olson  v.  St.  Paul,  etc.,  Ins.  Co.,    183 
Omaha  F.  Ins.  Co.  v.  Dierks,  43,  170 
v.  Drennan,  359 

Omberg  v.  United  States,  etc., 

Ass'n,  431,  433 

O'Neil  v.  American  F.  Ins.  Co.,    166 
v.  Buffalo  F.  Ins.  Co.,  235 

Order  of  Mutual  Companions  v. 

Griest,  393 

Ordway  v.  Chace,  250 

v.  Continental  Ins.  Co.,  306 

O'Reilly  v.  London  Assur.  Corp., 

295,  296 

Orient  Ins.  Co.  v.  Burrus,  256 

v.  Clark,  315 

v.  Daggs,  21,  365 

Ormond  v.  Fidelity  L.  Ass'n,  112 
Orr  v.  Hanover  F.  Ins.  Co.,  272 

Orrell  v.  Hampden  F.  Ins.  Co.,  260 
Osborne  v.  Phenix  Ins.  Co.,  369 
Oshkosh  Gas  Light  Co.  v.  Ger- 

mania  F.  Ins.  Co.,     242,  363,  364 
Oshkosh  Packing,  etc.,   Co.  v. 

Mercantile  Ins.  Co.,  366 

Overhiser  v.  Overhiser,  55 

Overton  v.  American,  etc.,  Ins. 

Co.,  244 


Pacific,  etc.,  Ins.  Co.  v.  Snowden,  432 

Packham  v.  German,  etc.,  Ins. 

•        Co.,  373,  374 


xliv 


TABLE    OF    CASES. 


[References  are  to  Pages.] 


Page  v.  Burnstine,  53,  59 

Painter  v.  Industrial  L.  Ass'n,  125 
Palmer  v.  Hartford  Ins.  Co.,  298 
Palmer  Sav.  Bank  v.  Insurance 

Co.,  379 

Paltrovitch  v.  Phoenix  Ins.  Co.,  150 
Pangborn  v.  Continental  Ins. 

Co.,  252 

Parker  v.  Citizens'  Ins.  Co.,          131 
v.  Des  Moines  L.  Ass'n,  414 

v.  Farmers',  etc.,  Ins.  Co.,          312 
v.  Otsego,  etc.,  Ins.  Co.,      79,  246 
Parker,   etc.,   Mfg.   Co.   v.   Ex- 
change F.  Ins.  Co.,  303 
Parks  v.  Anchor,  etc..  Ins.  Co..     319 
Parno  v.  Iowa,  etc.,  Ins.  Co.,  160,  161 
Partridge  v.  Milwaukee,  etc., 

Ins.  Co.,  304,  313 

Patch  v.  Phoenix,  etc.,  Ins.  Co.,  87 
Patrick  v.  Farmers'  Ins.  Co.,  313 
Patrons',  etc.,  Soc.  v.  Hall,  181 

Patterson  v.  Natural  Prem.,  etc., 

Ins.  Co.,  69,  410,  414,  419 

Paul    v.    Travelers'    Ins.    Co., 

429,  431,  433 

v.  Virginia,  21 

Pawson  v.  Watson,  87,  100 

Peabody  v.  Satterlee,  318 

Peacock  v.  New  York  L.  Ins.  Co.,  423 
Pearson  v.  Commercial,  etc., 

Assur.  Co.,  191 

Peck  v.  Girard,  etc.,  Ins.  Co.,  263 
Pellazzino  v.  German,  etc.,  Soc.,  392 
Pellet  v.  Manufacturers',  etc., 

Ins.  Co.,  147 

Pelzer  Mfg.  Co.  v.  St.  Paul,  etc., 

Ins.  Co.,  47 

v.  Sun  Fire  Office,  47,  78 

Pemberton  v.  Oakes,  469 

Pendleton  v.  Knickerbocker  L. 

Ins.  Co.,  116 

Penfold  v.  Universal,  etc.,  Ins. 

Co.,  416 

Pennington  v.  Pacific,  etc.,  Ins. 

Co.,  436 


Penn  Mut.  L.  Ins.  Co.  v.  Mechan- 
ics',  etc.,   Co., 

23,  74,  81,  100,  102,  106,  122,  427 
v.  Wiler,  76,  79 

Pennsylvania,  etc.,  Co.  v.  Phila- 
delphia, etc.,  Co.,  370 
Pennsylvania,  etc.,  Ins.  Co.  v. 

Schmidt,  269 

Pennsylvania    F.    Ins.    Co.    v. 

Dougherty,  242,  252 

v.  Drackett,  334,   366 

Pennsylvania  Ins.  Co.  v.  Bow- 
man, 278 
v.  Carter,  114 
v.  Gottsman's  Adm'rs,                  255 
Pennypacker  v.  Capital  Ins.  Co., 

22,  312,  313,  317,  318,  323 
People  v.   Fidelity,   etc.,   Co., 

17,  22,  459 

v.  Formosa,  111 

v.  Mercantile  Credit  Guar.  Co.,  467 

v.  Rose,  14,  15,  18,  459 

v.  Rosendale,  18 

People's  Ace.  Ass'n  v.  Smith,       312 

People's  F.  Ins.  Co.  v.  Pulver,      310 

People's  Ice  Co.  v.  Employers', 

etc.,  Assur.  Corp.,  452 

People's  Ins.  Co.  v.  Spencer,          25 

Peoria,  etc.,  Ins.  Co.  v.  Anapow,  176 

v.  Botto,  302 

v.  Hall,  280 

v.  Lewis,  184 

v.  Whitehill,  359 

Peoria  Ins.  Co.  v.  Walser,  36 

Peoria   Sugar  Refining  Co.   v. 

Canada,  etc.,  Ins.  Co.,  361 

Perine  v.  Grand  Lodge,  80,  101 

Perkins  v.  New  England,  etc., 

Ins.  Co.,  221 

Perley  v.  Eastern  R.  Co.,  45 

Perrin  v.  Prudential  Ins.  Co.,      418 
Perry  v.  Lorillard  Ins.  Co.,          273 
v.  Mechanics'  Mut.  Ins.  Co.,       44 
Persons  v.  State,  417 

Peterson  v.  Hartford  F.  Ins.  Co., 

300,  302 
v.  Mississippi  Valley  Ins.  Co.,   188 


TABLE    OF    CASES. 


xhr 


[References 

Petitpain  v.  Mutual  Ass'n,  423 

Pettit  v.  State  Ins.  Co.,  179 

Petty  v.  Mutual  F.  Ins.  Co.,          205 
Pfister  v.  Gerwig,  273 

Phadenhauer  v.  Germania,  etc., 

Ins.  Co.,  416 

Phelan  v.  Northwestern,  etc.,  Ins. 

Co.,  120 

v.  Travelers'  Ins.  Co.,         430,  443 
Phelps  v.  Gebhard  F.  Ins.  Co.,      296 
Phenix  Ins.  Co.  v.  Bachelder,      116 
v.  Clay,  25 

v.  Covey,  145 

v.  Findley,  460 

v.  Holcombe,  145,  230,  267 

v.  Johnston,  171 

v.  Lamar,  223 

v.  Munger,  306 

v.  Omaha  Loan,  etc.,  Co.,  265 

v.  Pennsylvania  R.  Co.,  22 

v.  Pickel,  205,  312 

v.  Stocks,  144 

v.  Walters,  281 

Philadelphia  Ins.  Co.  v.  Washing- 
ton Ins.  Co.,  18 
Philadelphia  Tool  Co.  v.  British, 

etc.,  Assur.  Co.,  48,  252 

Philbrook  v.  New  England,  etc., 

Ins.  Co.,  224 

Philips  v.  Knox  County  Mut.  Ins. 

Co.,  49 

Phillips  v.  Foxall,  460 

v.  New  York,  etc.,  Ins.  Co.,         424 
Phillipsburg  Horse  Car  Co.  v. 

Fidelity,  etc.,  Co.,  453 

Phoenix  Ins.  Co.  v.  Asberry,          265 
v.  Badger,  338 

v.  Butler,  363 

v.  Carnahan,  332,  339 

v.  Copeland,  223 

v.  Doster,  124 

v.  Erie,  etc.,  Transp.  Co., 

45,  47,  373,  376 

v.  Favorite,  175 

v.  Flemming,     146,  151,   158,   281 
v.  Greer,  212 

v.  Lawrence,  170,  203,  272 


are  to  Pages.] 
Phoenix  Ins.  Co.  v.  Michigan,  etc., 

R.  Co.,  222,  228 

v.  Minner,  322 

v.  Peak,  364 

v.  Pratt,  147 

v.  Ryland,  34 

v.  Spiers,  134 

Phoenix  Life  Ins.  Co.  v.  Raddin, 

73,  79,  80,  100,  101 
Pickett  v.  Pacific,  etc.,  Ins.  Co., 

431,  433 
Piedmont,  etc.,  Ins.  Co.  v.  Ew- 

ing,  102 

Pierce  v.  Equitable  Assur.  Soc.,    16 
v.  Travelers',  etc.,  Ins.  Co.,       416 
Pindar  v.  Kings,  etc.,  Ins.  Co.,     280 
Pingrey  v.  National  L.  Ins.  Co.,   403 
Pioneer  Sav.,  etc.,  Co.  v.  Provi- 
dence, etc.,  Ins.  Co.,  261 
Pitney  v.  Glens  Falls  Ins.  Co., 

222,  228 

Pitt  v.  Berkshire  Ins.  Co.,  115 

Pittel  v.  Fidelity,  etc.,  Ass'n,        386 
Place   v.    St.   Paul   Title   Ins., 

etc.,  Co.,  470 

Planters',  etc.,  Ins.  Ass'n  v. 

Dewberry,  273 

Planters',  etc.,  Ins.  Co.  v.  Row- 
land, 274 
v.  Savings,  etc.,  Co.,  380 
Planters'  Mut.  Ins.  Co.  v.  Engle, 

176,  181 

v.  Loyd,  249 

Platt  v.  ^tna  Ins.  Co.,  150 

Plumb  v.  Penn,  etc.,  Ins.  Co.,         421 
Pollock  v.  Donaldson,  110 

v.  German  F.  Ins.  Co.,  153 

v.  United  States,  etc.,  Ass'n,     433 
Pool  v.  Milwaukee,  etc.,  Ins.  Co., 

29,  234 

Poor  v.  Humboldt  Ins.  Co.,  292 

Portage,  etc.,  Ins.  Co.  v.  West,     359 
Porter  v.  Mutual  L.  Ins.  Co.,         396 
v.  Orient  Ins.  Co.,  251 

v.  Traders'  Ins.  Co.,   324,  326,  333 
Port  Huron,  etc.,  R.  Co.  v.  Gala- 
nan,  343 


xlvi 


TABLE    OF    CASES. 


[References  are  to  Pages.] 

Portsmouth  Ins.  Co.  v.  Reynolds, 

207,  215 

Post  v.  JEtna.  Ins.  Co.,  295 

v.  Hampshire,  etc.,  Ins.  Co.,        34 

Pottsvllle,  etc.,  Ins.  Co.  v.  Min- 

nequa  Springs,  etc.,  Co.,         136 

Powell  v.  Dewey,  58,  65 

Power  v.  Ocean  Ins.  Co.,  43,  171 

Powers  v.  Guardian,  etc.,  Ins. 

Co.,  236,  267 

Prader  v.  National,  etc.,  Ass'n,    445 

Pratt  v.  Dwelling  House,  etc., 

Ins.  Co.,  202 

Presbyterian,  etc.,  Assur.  Fund 

v.  Allen,  390,  392,  394,  426 

Pretzfelder  v.  Merchants'  Ins. 

Co.,  352 

Price  v.  Phoenix,  etc.,  Ins.  Co., 

89,  103 
v.  Supreme  Lodge,  59 

Prince,  etc.,  Ass'n  v.  Palmer,       391 

Pritchard  v.  Merchants',  etc., 

Assur.  Soc.,  118 

Pritchet  v.  Insurance  Co.,  51 

Probst  v.  Insurance  Co.,  335 

Proebstel  v.  State  Ins.  Co.,  398 

Proudfoot  v.  Montefiore,  83 

Providence  L.,  etc.,  Co.  v.  Mar- 
tin, 429 

Provident,  etc.,  Soc.  v.  Oliver,      399 

Provident  L.  Ins.  Co.  v.  Fennell,   95 

Provident   Sav.,    etc.,    Soc.    v. 

Llewellyn,  81,  100 

Prudential  Assur.  Co.  v.  JEtna 

L.  Ins.  Co.,  98 

Prudential   Ins.   Co.   v.   Freder- 
icks, 72 
v.  Haley,                                        418 
v.  Hunn,                                     60,  70 
v.  Young,                                       407 

Pudritzky  v.  Supreme  Lodge,        441 

Pulaski,  etc.,  Ins.  Co.  v.  Dawson,  399 

Pullis  v.  Robison,  395 

Pupke  v.  Resolute  F.  Ins.  Co.,      275 

Putnam  v.  Mercantile  Mar.  Ins. 

Co.,  44 

Putze  v.  Saginaw,  etc.,  Ins.  Co.,  358 


Q 


Quarles  v.  Clayton,  26 

Quarrier  v.  Peabody  Ins.  Co.,        228 
Queen  Ins.  Co.  v.  Block,  277 

v.  McCoin,  370 

v.  Young,  220 

Quigg  v.  Coffy,  111 

Quigley  v.  St.  Paul,  etc.,  Trust 

Co.,  227 

v.  St.  Paul  Title  Ins.,  etc.,  Co.,  470 
Quinlan  v.  Providence,  etc.,  Ins. 

Co.,  141,  169,  256,  318 

Quong  Tue  Sing  v.  Anglo-Nevada 
Assur.  Corp.,  301,  302 


Railway,  etc.,  Ass'n  v.  Drum- 

mond,  442 

v.  Johnson,  432 

v.  McCabe,  443 

Rafel  v.  Nashville,  etc.,  Ins.  Co.,  180 
Rafferty  v.  New  Brunswick  F. 

Ins.  Co.,  96 

Randall  v.  American  F.  Ins.  Co.,  389 
Rawls  v.  American  M.  L.  Ins. 

Co.,  54,  55,  60 

Raymond  v.  Farmers',  etc.,  Ins. 

Co.,  292,  332 

Rayner  v.  Preston,  275 

Read  v.  State  Ins.  Co.,    246,  339,  341 
Reaper  City   Ins.   Co.   v.   Bren- 

nan,  255 

Reardon  v.  Faneuil  Hall  Ins. 

Co.,  233 

Redfield  v.   Holland   Purchase 

Ins.  Co.,  44,  48 

Reed  v.  Equitable,  etc.,  Ins.  Co., 

158,  162 
v.  Washington,  etc.,  Ins.  Co., 

332,  341 

v.  Windsor,  etc.,  Ins.  Co.,  275 
Reese  v.  Fidelity,  etc.,  Ass'n,  398 
Reilly  v.  Franklin  Ins.  Co.,  335,  364 
Renier  v.  Dwelling  House  Ins. 

Co.,  144,  154 


TABLE   OF    CASES. 


xlvii 


[References 

Rensenhouse  v.  Seeley,  24 

Renshaw  v.  Fireman's  Ins.  Co.,  214 
Reynolds  v.  Atlas,  etc.,  Ins.  Co., 

81,  87,  142,  278 

v.  Equitable  Ace.  Ass'n,  430 

v.  Iowa,  etc.,  Ins.  Co.,  162 

Rice  v.  Fidelity  &  Dep.  Co.,          464 

v.  National,  etc.,  Ins.  Co.,          459 

v.  Tower,  263,  269 

Richards  v.  Travelers'  Ins.  Co., 

429,  431,  442 
v.  Washington,  etc.,  Ins.  Co., 

75,   185 

Richardson  v.  German  Ins.  Co.,   273 
Richelieu,  etc.,  Co.  v.  Boston, 

etc.,  Ins.  Co.,  29 

Richland,  etc.,  Ins.  Co.  v.  Samp- 
son, 258 
Richmond  v.  Niagara  F.  Ins.  Co.,  157 
Richwine   v.   La   Crosse,   etc., 

Ass'n,  126 

Ricker  v.  Charter  Oak  L.  Ins. 

Co.,  389 

Rickerson  v.  Hartford,  etc.,  Ins. 

Co.,  169 

Riddlesbarger  v.  Hartford  Ins. 

Co.,  359 

Riggs  v.  Commercial  M.  Ins. 

Co.,  40,  49,  70 

Riner  v.  Riner,  68 

Ring  v.  Phoenix  Assur.  Co.,   105,  171 
Ripley  v.  ^tna  Ins.  Co.,          87,  359 
v.  Insurance  Co.,  .    433 

Rising  Sun  Ins.  Co.  v.  Slaugh- 
ter, 224 
Rison  v.  Wilkerson,  390 
Ritter  v.  Mutual   L.   Ins.  Co., 

413,  414 

Rittler  v.  Smith,  54,  55,  64 

Robert  v.  New  England,  etc.,  Ins. 

Co.,  113 

Roberts  v.  Firemen's  Ins.  Co.,       47 
v.  Winton,  53 

Robertson  v.  U.  S.  Credit  Sys- 
tem, 17 
Robinson  v.  Gator,                           405 
v.  Continental  Ins.  Co.,              116 


are  to  Pages.  ] 
Robinson  v.  Fire  Ass'n, 
v.  Hurst, 
v.  Irish,  etc.,  Soc., 
v.  Palatine  Ins.  Co., 
v.  Templar  Lodge, 


227 
386 
334 
310 
333 


v.  United   States,  etc.,  Ass'n, 

390,  393 
Roby  v.  American,  etc.,  Assur. 

Co.,  149,  268 

Rochester  Loan,  etc.,  Co.  v.  Lib- 
erty Ins.  Co.,        44,  70,  248,  310 
Rockhold  v.  Canton  Mas.  Mut. 

B.  Ass'n,  24 

Roe  v.  Dwelling  House  Ins.  Co.,  286 
Roehner  v.  Knickerbocker  L.  Ins. 

Co.,  116 

Rohrbach  v.  German,  etc.,  Ins. 

Co.,  44,  48 

Rokes  v.  Amazon  Ins.  Co.,  312 

Roller  v.  Beam,  403 

v.  Moore,  56,  65 

Rood  v.  Railway,  etc.,  Ass'n,        333 

Roos  v.  Merchants'  Mut.  Ins.  Co.,  48 

v.  Philadelphia,  etc.,  Ins.  Co.,  376 

Rose  v.  Kimberly,  etc.,  Co.,  22 

v.  Wortham,  54 

Rosecrans  v.  North  Amer.  Ins. 

Co.,  230 

Rosenplanter  v.  Provident,  etc., 

Soc.,  120,  121 

Rosenwald  v.  Phoenix  Ins.  Co.,  352 
Rottier  v.  German  Ins.  Co.,  361 
Rowley  v.  Empire  Ins.  Co.,  156 

Royal  Ins.  Co.  v.  Beatty,  32,  295 

v.  Clark,  147 

Ruggles  v.  American  Cent.  Ins. 

Co.,  30,  140 

v.  General  Interest  Ins.  Co.,  85 
Rumford  Falls  Paper  Co.  v.  Fidel- 
ity, etc.,  Co.,  452 
Rumsey  v.  Phoenix  Ins.  Co.,  274 
Runkle  v.  Citizens'  Ins.  Co.,  271 
Ruse  v.  Mutual  Ben.  L.  Ins.  Co.,  51 
Russ  v.  Waldo,  etc.,  Ins.  Co.,  278 
Rustin  v.  Standard,  etc.,  Ins. 

Co.,  430 


zlviii 


TABLE   OF    CASES. 


[References 
Ruthven  v.  American  F.  Ins.  Co., 

144,  146,  152 
Ryan  v.  Springfield,  etc.,  Ins. 

Co.,  149 

v.  World,   etc.,    Ins.    Co., 

138,   142,   143 
Rynalski  v.  Insurance  Co.,  316 


Sabin  v.  Phinney,  56,  60,  390 

v.  Senate,  etc.,  412,  413 

Sadler  Co.  v.  Badcock,  26,  41 

Salisbury  v.  Hekla  Fire  Ins.  Co.,  31 
Sanborn  v.  Fireman's  Ins.  Co., 

32,  33 

Sanders  v.  Cooper,  157,  177 

v.  Hillsborough,  etc.,  Ins.  Co.,  266 
Sanford  v.  Orient  Ins.  Co.,  32,  45 
Santa  Clara,  etc.,  Academy  v. 

Northwestern,  etc.,  Ins.  Co.,    46 
Satterthwaite  v.   Mutual  Ben. 

Ins.  Ass'n,  76 

Savage  v.  Howard  Ins.  Co.,          266 
v.  Phoenix  Ins.  Co.,  352 

Saveland  v.  Fidelity  &  Gas.  Co.,  447 
Saville  v.  ^Etna  Ins.  Co.,  220 

Scanlon  v.  Union  F.  Ins.  Co.,  260 
Scarth  v.  Security,  etc.,  Soc.,  412 
Schaeffer  v.  Anchor,  etc.,  Ins. 

Co.,  46 

v.  Farmers',  etc.,  Ins.  Co.,  241 
Scheiderer  v.  Travelers'  Ins.  Co.,  440 
Schenck  v.  Mercer,  etc.,  Ins.  Co.,  224 
Scherar  v.  Prudential  Ins.  Co.,  412 
Scheufler  v.  Grand  Lodge,  124 

Schillinger  v.  Boes,  393 

Schimp  v.   Cedar  Rapids  Ins. 

Co.,  149 

Schmidt  v.  Iowa,  etc.,  Ass'n,        394 

v.  Peoria,  etc.,  Ins.  Co.,  170 

Schmurr  v.  State  Ins.  Co.,  321 

Schneider  v.  Provident  L.  Ins. 

Co.,  437 

Schoenau  v.  Grand  Lodge,  390,  394 
Schonfield  v.  Turner,  55,  59 

Schreiber  v.  German-Amer.,  etc., 

Ins.  Co.,  131 


are  to  Pages.] 

Schrepfer  v.  Rockford  Ins.  Co.,    348 
Schroeder  v.  Keystone  Ins.  Co.,   361 
v.  Trade  Ins.  Co.,  174 

Schuermann  v.  Dwelling  House 

Ins.  Co.,  171,  291 

Schultz  v.  Caledonian  Ins.  Co.,  251 
v.  Citizens',  etc.,  Ins.  Co.,  386 
v.  Mutual  L.  Ins.  Co.,  96 

Schuster  v.  Dutchess  Co.  Ins. 

Co.,  202 

Schwarzbach   v.    Ohio   Valley, 

etc.,  Union,  156 

Scott  v.  Avery,  332 

v.  Dickson,  28,  55,  408 

Scottish,  etc.,  Ins.  Co.  v.  Keene,  325 
v.  Petty,  252 

Scottish  Union,  etc.,  Ins.  Co.  v. 

Enslie,  360 

Scripture  v.  Lowell,  etc.,  Ins. 

CO.,  194,  195 

Sea  Ins.  Co.  v.  Johnston,         300,  305 
Seal  v.  Farmers',  etc.,  Ins.  Co., 

245,  246 
Seaman  v.  Enterprise,  etc.,  Ins. 

Co.,  49 

Seamans  v.  Knapp,  136 

v.  Millers'  Mut.  Ins.  Co.,  125 

v.  Temple  Co.,  22 

Seaton  v.  Heath,  73,  466 

Seavey  v.  Central,  etc.,  Ins.  Co.,  181 
Security  Co.  v.  Panhandle  Nat'l 

Bank,  378 

Security,  etc.,  Ins.  Co.  v.  Webb,  428 
Security  Ins.  Co.  v.  Mette,  214 

Security   F.   Ins.   Co.   v.   Ken- 
tucky, etc.,  Ins.  Co.,     33,  34,  174 
Seller  v.  Economic  L.  Ass'n,         413 
Sellers  v.  Commercial  F.  Ins. 

Co.,  131 

Sergent  v.  Liverpool,  etc.,  Ins. 

Co.,  314,  339 

Seyk  v.  Millers',  etc.,  Ins.  Co., 

334,  335,  364,  367 
Shader  v.  Railway,  etc.,  Assur. 

Co.,  447 

Shaffer  v.  Travelers'  Ins.  Co.,      438 


TABLE    OF    CASES. 


xlix 


[References  are  to  Pages.] 


Shakman  v.  United  States,  etc.,  Co., 

17,  459,  465 

Shank  v.  Glens  Falls  Ins.  Co.,  133 
Shapiro  v.  St.  Paul,  etc.,  Ins. 

Co.,  316 

v.  Western,  etc.,  Ins.  Co.,  316 

Sharpless   v.    Hartford    F.    Ins. 

Co.,  176,  193 

Shawnee  F.  Ins.  Co.  v.  Bayha, 

359,  360 

Sheanon  v.  Pacific,  etc.,  Ins.  Co.,  447 
Shearman  v.  Niagara  F.  Ins. 

Co.,  171,  274,  277 

Sheets  v.  Sheets,  60 

Shepherd  v.  Union,  etc.,  Ins.  Co.,  256 
Sheppard  v.  Peabody  Ins.  Co.,  47 
Sherman  v.  Com.,  426 

Sherwood    v.   Agricultural    Ins. 

Co.,  272,  273 

v.  Harral,  48 

Shevlin  v.  American,  etc.,  Ass'n,  438 
Shoaf  v.  Palatine  Ins.  Co.,  377 

Short  v.  Home  Ins.  Co.,  157 

Sias  v.  Roger  Williams  Ins.  Co.,  221 
Sibley  v.  Prescott  Ins.  Co.,  76 

Sick  v.  Covenant,  etc.,  Ins.  Co.,  398 
Sides  v.  Knickerbocker  L.  Ins. 

Co.,  55 

Siltz  v.  Hawkeye  Ins.  Co.,  149 

Silver  v.  Assurance  Co.,  336 

Simcoke  v.  Grand  Lodge,  66,  385 
Simeral  v.  Dubuque,  etc.,  Ins. 

Co.,  275 

Simon  v.  Home  Ins.  Co.,  173 

Simpson  v.  Life  Ins.  Co.,  410 

Sinclair  v.  Maritime,  etc.,  Co.,  441 
Sisk  v.  Citizens'  Ins.  Co.,  249 

Siter  v.  Morrs,  176 

Skillings  v.  Massachusetts  Ben. 

Ass'n,  384 

Skinner  v.  Norman,  306 

Skinner  &  Sons  v.  Houghton, 

261,  263 

Sladden  v.  New  York  L.  Ins.  Co.,  80 
Slater  v.  Capital  Ins.  Co.,  134 

Slinkard  v.  Manchester  F.  Assur. 

Co.,  193 


Sloat  v.  Royal  Ins.  Co.,  228 

Sloman  v.  Mercantile,  etc.,  Guar. 

Co.,  467,  469 

Smaldone  v.  President,  etc.,          322 

Small  v.  Westchester  F.  Ins.  Co.,  272 

Smedley  v.  Felt,  390 

Smiley  v.  Citizens'  Ins.  Co.,          212 

Smith  v.  ^Etna  L.  Ins.  Co.,  387 

v.  Agricultural  Ins.  Co.,  202 

v.  Boston,  etc.,  Ass'n,  385 

v.  Columbia  Ins.  Co.,  47,  255 

v.  German  Ins.  Co., 

151,  236,  239,  282 

v.  Head,  391 

v.  Herd,  332 

v.  Monmouth,  etc.,   Ins.  Co., 

256,  263,  278 

v.  National  Ben.  Soc.,  392,  414 
v.  National  Credit  Ins.  Co.,  17 
v.  National,  etc.,  Ins.  Co.,  459 
v.  National  L.  Ins.  Co.,  119 

v.  Niagara  F.  Ins.  Co.,  141,  146 
v.  Northwestern,  etc.,  Ins.  Co.,  422 
v.  Phenix  Ins.^Co.,  274 

v.  Phoenix  Ins.  Co.,  45 

v.  Preferred,  etc.,  Ass'n,  438 

Smith,    etc.,    Co.    v.    Travelers' 

Ins.  Co.,  315 

Sneed  v.  British,  etc.,  Assur.  Co., 

326,  328 

Snow  v.  Carr,  175,  176 

Snyder  v.  Dwelling  House  Ins. 

Co.,  285 

Solomon  v.  Continental  F.  Ins. 

Co.,  312 

Solvency  Mut.  Guar.  Co.  v.  Free- 
man, 469 
v.  York,  465 
Somerfield  v.  State  Ins.  Co.,          224 
Somers  v.  Kansas  Prot.  Union,      72 
Soorholtz  v.  Marshall,  etc.,  Ins. 

Co.,  321 

Sossaman  v.  Pamlico,  etc.,  Ins. 

Co.,  264 

Souder  v.  Home,  etc.,  Soc.,  60 

Southard  v.  Railway,  etc.,  Assur. 
Co.,  430,  431 


1 


TABLE   OF   CASES. 


{.References 
Southern  Fertilizer  Co.  v.  Reams, 

277 
Southern  F.  Ins.  Co.  v.  Knight, 

202,  317 

Southern  Ins.  Co.  v.  North  Brit- 
ish, etc.,  Ins.  Co.,  33 
v.  Parker,                                      329 
Southern  L.  Ins.  Co.  v.  Wilkin- 
son,                                            107 
Southwick  v.  Atlantic,  etc.,  Ins. 

Co.,  249 

Sowers  v.  Mutual  F.  Ins.  Co.,      161 
Spare  v.  Home,  etc.,  Ins.  Co., 

160,  172,  275,  361 

Spitzer  v.  St.  Mark's  Ins.  Co.,       32 
Spoeri    v.    Massachusetts,    etc., 

Ins.  Co.,  148 

Sprague   v.    Holland,    etc.,    Ins. 

Co.,  156 

Spratley  v.  Hartford  Ins.  Co.,      179 
Springfield,  etc.,  Ins.  Co.  v.  Payne, 

342 
Springfield,  etc.,  Co.  v.  Traders' 

Ins.  Co.,  140,  257 

Spruill  v.  North  Carolina,  etc., 

Ins.  Co.,  207 

v.  Northwestern,  etc.,  Ins.  Co.,  412 

Stacey  v.  Franklin  F.  Ins.  Co.,     224 

Stambaugh  v.  Blake,  66,  68 

Standard,  etc.,  Ins.  Co.  v.  Jones,  446 

v.  Martin,  87,  90,  424,  435 

v.  Thornton,  417,  439 

Standard    L.,    etc.,    Ins.    Co.    v. 

Taylor,  435 

Standard    Oil    Co.    v.    Triumph 

Ins.  Co.,  135 

Stanley  v.  Western,  etc.,  Ins.  Co.,  194 

Star  Accident  Co.  v.  Sibley,          435 

Starck  v.  Union,  etc.,  Ins.  Co.,      412 

State  v.  Ackerman,  21 

v.  Bankers',  etc.,  Ass'n,  23 

v.  Dean,  208 

v.  Eagle  Ins.  Co.,  21 

v.  Federal  Inv.  Co.,  15,  16,  28 

v.  Fricke,  22 

v.  Hogan,  17 

v.  Hosmer,  129 


are  to  Pages.] 

State  v.  Monitor  F.  Ass'n,  122 

v.  Nichols,  24,  426 

v.  Stone,  22,  130 

v.  Tomlinson,  60 

v.  Towle,  17 

v.  Whitmore,  23 

State  Ins.  Co.  v.  Gray,  138 

v.  Ketcham,  322 

v.  Maackens,  325 

v.  Meesman,  361 

v.  Schreck,  170,  254 

State  Mut.  F.  Ins.  Co.  v.  Brink- 
ley,  etc.,  Co.,  22 
St  Clair,  etc.,  Soc.  v.  Fietsam,     408 
St.  Clara,  etc.,  Academy  v.  Dela- 
ware Ins.  Co.,                            335 
Steel  v.  Phenix  Ins.  Co.,               361 
Steele  v.  German  Ins.  Co.,      134,  316 
Steen  v.  Niagara  F.  Ins.  Co.,        361 
Steinbach  v.  Lafayette  F.  Ins. 

Co.,  282 

v.  Relief  F.  Ins.  Co.,  282 

Steinback  v.  Diepenbrock,  403 

Stemmer  v.   Scottish,  etc.,   Ins. 

Co.,  181,  343,  347 

Stennett  v.  Pennsylvania  F.  Ins. 

Co.,  146 

Stensgaard  v.  St.  Paul,  etc.,  Ins. 

Co.,  16,  101 

Stephens  v.  Union  Assur.  Soc., 

336,  348 
Stetson   v.   Massachusetts,   etc., 

Ins.  Co.,  260 

Stettiner  v.  Granite  Ins.  Co.,       258 
Stevens  v.  Citizens'  Ins.  Co.,         223 
v.  Warren,  406 

Stevenson  v.  Phoenix  Ins.  Co.,      225 
Stevers   v.    Peoples',    etc.,    Ins. 

Ass'n,  447 

Stewart  v.  Equitable,  etc.,  Ass'n,  425 
v.  Union,  etc.,  Ins.  Co.,        154,  398 
Stillwell  v.  Staples,  175 

Stilwell  v.   Covenant,  etc.,   Ins. 

Co.,  122 

Stirling  v.  Vaughan,  45 

St.  John  v.  American,  etc.,  Ins. 

Co.,  60,  211 


TABLE    OF    CASES. 


li 


[References 

St.  Louis,  etc.,  R.  Co.  v.  Com- 
mercial, etc.,  Ins.  Co.,  29 
St.  Louis  Ins.  Co.  v.  Kyle,  313 
Stoelker  v.  Thornton,  58 
Stolle  v.  ^Etna,  etc.,  Ins.  Co.,  275 
Stoltenberg  v.  Continental  Ins. 

Co.,  289 

Stone  v.  Franklin  F.  Ins.  Co.,      301 

v.  Hawkeye  Ins.  Co.,  156,  160 

v.  Howard  Ins.  Co.,  232,  291 

v.  United  States  Gas.  Co.,  436,  437 

St.  Onge  v.  Westchester  F.  Ins. 

Co.,  259 

Storer  v.  Elliott  F.  Ins.  Co.,  176 
Stout  v.  City  F.  Ins.  Co.,  46,  359 
Stowell  v.  Clark,  248 

St.  Paul,  etc.,  Ins.  Co.  v.  Bruns- 
wick Grocery  Co.,  275 
v.  Knickerbocker,  etc.,  Co.,       224 
v.  Parsons,                    146,  149,  154 
v.  Sharer,                                      130 
v.  Upton,                                        112 
Straker  v.  Phenix  Ins.  Co., 

98,  235,  332 

Strauss  v.  Imperial  F.  Ins.  Co.,    208 
v.  Phenix  Ins.  Co.,  227 

Streeter  v.  Western  Union,  etc., 

Soc.,  413 

Stribley  v.   Imperial   Mar.   Ins. 

Co.,  82 

Strickland  v.  Council  Bluffs  Ins. 

Co.,  134 

Strike   v.   Wisconsin,   etc.,    Ins. 

Co.,  61 

Strome  v.  London  Assur  Corp.,  346 
Strong  v.  Manufacturers'  Ins. 

Co.,  41,  42 

v.  Phoenix  Ins.  Co.,  377 

Stuart  v.  Reliance  Ins.  Co.,  260 

Sturm  v.  Atlantic,  etc.,  Ins.  Co.,  205 
Sugg  v.  Hartford  F.  Ins.  Co.,  223 
Sulz  v.  Mutual,  etc.,  Ass'n,  386 

Summers  v.  Fidelity,  etc.,  Ass'n,  396 
Sunderlin  v.  JEtna  Ins.  Co.,          183 
Sun  Fire  Office  v.  Clark,        255,  263 
v.  Wich,  133,  267 

Sun,  etc.,  Ins.  Co.  v.  Crist,      336,  338 


are  to  Pages.] 

Sun  Ins.  Office  v.  Beneke,  248,  257 
v.  Merz,  41 

Sun  L.  Ins.  Co.  v.  Taylor,  410 

Sun  Mut.  Ins.  Co.  v.  Mattingly,  316 
v.  Ocean  Ins.  Co.,  72 

v.  Tufts,  235 

Supreme  Assembly  v.  Campbell,   407 
Supreme  Commandery  v.  Ains- 

worth,  392,  413 

Supreme  Conclave  v.  Capella, 

393,  394 

Supreme  Council  v.  Brashears,  91 
v.  Fidelity,  etc.,  Co.,  459,  463 
v.  Forsinger,  332,  333 

v.  Garrigus,  429,  441 

v.  Perry,  394 

Supreme  Lodge  v.  Beck,  444 

v.  Kutscher,  414 

v.  Taylor,  422 

v.  Withers,  401 

Susquehanna,    etc.,    Ins.    Co.    v. 

Tunkhannock  Toy  Co.,  317 

Svea  Assur.  Co.  v.  Packham,        375 
Swain  v.  Agricultural  Ins.  Co.,    134 
v.  Macon  F.  Ins.  Co.,  227 

Sweeting  v.  Mutual  F.  Ins.  Co.,    224 
Sweetser  v.  Odd  Fellows',  etc., 

Ass'n,  126 

Swett  v.  Citizens',  etc.,  Soc.,         402 
Swift   v.    Mercantile    Mut.    Ins. 

Co.,  44 

v.  Railway,  etc.,  Ass'n,  408 

v.  San  Francisco  Stock,  etc., 

Board,  393 

v.  Vermont,  etc.,  Ins.  Co.,  252 
Swing  v.  H.  C.  Akeley  L.  Co.,  125 
Syndicate  Ins.  Co.  v.  Bohn,  250 


Taber  v.  Royal  Ins.  Co.,  312 

Talcott  v.  National,  etc.,  Ins. 

Co.,  467,  468 

Tallman  v.  Atlantic,  etc.,  Ins. 

Co.,  267 

Tank  v.  Rohweder,  342 


lii 


TABLE   OF    CASES. 


[References  are  to  Pages.] 


Tate  v.  Commercial  Bldg.  Ass'n, 

65,  68 

v.  Hyslop,  75 

Taylor  v.  Anchor,  etc.,  Ins.  Co.,     202 

v.  Germania  Ins.  Co.,  295 

v.  Merchants'  F.  Ins.  Co.,  115,  263 

v.  State  Ins.  Co.,  137 

v.  Travelers'  Ins.  Co.,  65 

Tebbets  v.  Mercantile,  etc.,  Guar. 

Co.,  17,  465 

Temple  v.  Niagara  F.  Ins.  Co., 

168,  356,  364 

Tesson  v.  Atlantic,  etc.,  Ins.  Co.,  179 
Teutonia  Ins.  Co.  v.  Beard,  214 

Teutonic,  etc.,  Ins.  Co.  v.  How- 
ell,  251 
Texas,  etc.,  Ins.  Co.  v.  Cohen,       267 
Texas  Ins.  Co.  v.  Stone,                 179 
Thayer  v.  Middlesex,  etc.,   Ins. 

Co.,  37 

Theobald  v.  Supreme  Lodge,  etc., 

426 

Thibert  v.  Supreme  Lodge,  392 

Thomas  v.   Builders',  etc.,   Ins. 

Co.,  224 

v.  Burlington  Ins.  Co.,  326 

v.  Grand  Lodge,  390,  392 

v.  Hartford  F.  Ins.  Co.,  291 

v.  Tradesmen's  Trust,  etc.,  Co., 

470 

v.  Vankopff,  26 

Thompson  v.  Caledonia  F.  Ins. 

Co.,  285 

v.  Insurance  Co.,  126 

v.  Insurance  Co.,  364 

v.  Phenix  Ins.  Co.,  151,  260 

v.  Thome,  110 

Thorndike    v.    Wells    Memorial 

Ass'n,  349 

Thum  v.  Wolstenholme,  396,  398 
Thurston  v.  Union  Ins.  Co.,  216 
Tidmarsh  v.  Washington,  etc., 

Ins.  Co.,  95 

Tillou  v.  Kingston,  etc.,  Ins.  Co., 

267,  269 
Tilton  v.  Hamilton  F.  Ins.  Co.,    210 


Tisdell   v.    New    Hampshire    F. 

Ins.  Co.,  302,  303 

Tittemore  v.  Vermont,  etc.,  Ins. 

Co.,  266 

Titus  v.  Glens  Falls  Ins.  Co., 

149,  150,  205,  256,  326 
v.  Poole,  360 

Tolford  v.  Church,  123,  125 

Tomlinson    v.    Monmouth,    etc., 

Ins.  Co.,  265,  276 

Tompkins  v.  Hartford  F.  Ins.  Co., 

170 
Tomsecek  v.  Travelers'  Ins.  Co., 

112,  114,  155 
Tooley  v.  Railway,  etc.,  Assur. 

Co.,  432 

Towle  v.  Ionia,  etc.,  Ins.  Co.,        151 
v.  National  Guardian  Ins.  Soc., 

464 

Towne  v.  Fire  Ass'n,  192 

Townsend  v.  Northwestern  Ins. 

Co.,  239 

Trabue  v.  Dwelling  House  Ins. 

Co.,  .     203,  272 

Trade  Ins.  Co.  v.  Barracliff,          191 
Traders',  etc.,  Ins.  Co.  v.  Race,     286 
Traders'  Ins.  Co.  v.  Catlin,    170,  237 
v.  Robert,  46 

Transatlantic  F.  Ins.  Co.  v.  Dor- 

sey,  194,  212,  213 

Trask  v.  State,  etc.,  Ins.  Co.,          312 
Travelers',    etc.,    Ace.    Ass'n    v. 

Stone,  439 

Travelers'  Ins.  Co.  v.  California 

Ins.  Co.,  361 

v.  Dunlap,  433,  434 

v.  Grant,  405 

v.  Jones,  439 

v.  McCarthy,  442 

v.  McConkey,  416,  441,  443 

v.  Melick,  431 

v.  Murray,  431 

v.  Pulling,  116 

v.  Randolph,  438,  439 

v.  Sheppard,  311,  416 

v.  Wild  River  Lumber  Co.,        454 


TABLE   OF    CASES. 


liii 


[References 
Travelers'  Prot.  Ass'n  v.  Lang- 

holz,  443 

Travis  v.  Peabody  Ins.  Co.,  173 

Trenton,  etc.,  Ins.  Co.  v.  Johnson,  50 
Trenton  Pass.  R.  Co.  v.  Guaran- 
tors', etc.,  Indem.  Co.,  451 
Trew  v.  Railway,  etc.,  Assur.  Co., 

431 
Trimble  v.  New  York  L.  Ins.  Co., 

115 
Trinity  College  v.  Travelers'  Ins. 

Co.,  40,  52,  54,  62,  65 

Trippe  v.  Provident  Fund  Soc.,  151 
Tritschler  v.  Keystone,  etc., 

Ass'n,  412 

Trott  v.  Woolwich,  etc.,  Ins.  Co.,  249 
Troy  v.  Sargent,  390 

Trudden  v.  Metropolitan  L.  Ins. 

Co.,  422 

Trumbull  v.   Portage,  etc.,   Ins. 

Co.,  263 

Trustees,    etc.,    v.    Brooklyn    F. 

Ins.  Co.,  30,  118,  295 

Tubbs   v.   Dwelling   House   Ins. 

Co.,  138 

Tucker  v.  Mutual  Ben.  Life  Co.,  431 
Tuckerman  v.  Home  Ins.  Co.,  45 
Turner  v.  Fidelity  &  Gas.  Co., 

150,  449 

Tuttle  v.  Travelers'  Ins.  Co.,  437,  439 
Tyler  v.  Odd  Fellows',  etc.,  Ass'n,  55 

U 

Uhlman  v.  New  York  L.  Ins.  Co., 

16,  19,  110 

Uhrig    v.    Williamsburgh,    etc., 
Ins.  Co.,  339,  343,  349 

Ulrich  v.  Reinoehl,  52,  53,  64 

Underbill  v.  Van  Cortlandt,  343,  346 

Underwood  Veneer  Co.  v.  Lon- 
don Guar.,  etc.,  Co.,  458 

Lnion  Bank  of  Chicago  v.  Kan- 
sas City  Bank,  259 

Union  Bldg.  Ass'n  v.  Rockford 

Ins..  Co.,  112 

Union    Cent.,    etc.,    Ins.    Co.    v. 

Moreland,  398 


are  to  Pages.] 

Union,  etc.,  Ass'n  v.  Frohard,      435 
Union,  etc.,  Ins.  Co.  v.  Buxer, 

117,  398 

v.  Hollowell,  413 

v.  Hilliard,  383 

v.  Lee,  420 

v.  Payne,  416,  417 

,  v.  Reif,  420 

Union  Fraternal  League  v.  Wal- 
ton, 56,  57,  60,  65 
Union  Ins.  Co.  v.  Smith,  29 
Union  Nat'l  Bank  v.  German  Ins. 

Co.,  220 

United    Brethren,    etc.,    Soc.    v. 

McDonald,  54,  58,  62,  66 

v.  O'Hara,  425 

v.  White,  426 

United  Firemen's  Ins.  Co.  v. 

Thomas,  145,  146,  222 

United,  etc.,  Ins.  Co.  v.  Foote, 

211,  279 
United  States,  etc.,  Ass'n  v. 

Barry,  429,  430 

v.  Hubbell,  431 

v.  Millard,  442 

United  States,  etc.,  Co.,  v.  Rob- 
ertson, 465 
United  States,  etc.,  Ins.  Co.  v. 

Kimberly,  170 

United  States  L.  Ins.  Co.  v.  Smith, 

121,  133,  160 

United  States  Trust  Co.  v.  Mu- 
tual, etc.,  Ins.  Co.,  384,  389 
Utter  v.  Travelers'  Ins.  Co.,  442,  445 


Valton  v.  National,  etc.,  Assur. 

Co.,  60,  75,  100,  101 

Vangindertaelen  v.  Phenix  Ins. 

Co.,  316,  331,  347 

Vankirk  v.  Citizens'  Ins.  Co.,  73 
Van  Norman  v.  Northwestern, 

etc.,  Ins.  Co.,  118 

Van  Poucke  v.  Netherland,  etc., 

Soc.,  333 

Van  Schoick  v.  Niagara  F.  Ins. 

Co.,  157 


liv 


TABLE   OF    CASES. 


[References 
Van  Valkenburgh  v.  American 

Ins.  Co.,  420 

v.  Lenox  F.  Ins.  Co.,  299 

Vergeront  v.  German  Ins.  Co.,      364 
Vick  v.  Clark,  112 

Viele  v.  Germania  Ins.  Co.,  137 

Vilas  v.  New  York,  etc.,  Ins.  Co., 

156,  201 

Virginia,  etc.,   Ins.  Co.  v.  Can- 
non, 332,  348 
v.  Thomas,  268 
v.  Vaughan,                                  267 
v.  Wells,                                        361 
Vivar  v.  Supreme  Lodge,         56,  100 
Vogel  v.  People's,  etc.,  Ins.  Co.,    216 
Voigt  v.  Kersten,                              392 
Voss   v.   Connecticut,   etc.,    Ins. 

Co.,        t  387 

W 

Wainer  v.  Milford,  etc.,  Ins.  Co., 

36,  40,  45,  204,  352 
Walcott  v.  Metropolitan  L.  Ins. 

Co.,  416 

Waldeck  v.  Springfield,  etc.,  Ins. 

Co.,  212 

Walden  v.  Louisiana  Ins.  Co.,        76 
Waldman  v.  North  British,  etc., 

Ins.  Co.,  134 

Walker  v.  Larkin,  64 

v.  Metropolitan  Ins.  Co.,  32 

Wallace  v.  Bankers'  L.  Ass'n,       412 

v.  Insurance  Co.,  354 

Waller  v.  Northern  Assur.  Co.,    110 

Walradt  v.  Phrenix  Ins.  Co.,  263,  269 

Walsh  v.  Hartford  F.  Ins.  Co.,      140 

v.  Mutual  L.  Ins.  Co.,  389 

v.  Vermont,  etc.,  Ins.  Co.,          315 

Walton  v.  Agricultural  Ins.  Co.,  266 

Waring  v.  Indemnity  Ins.  Co.,        47 

Warnock  v.  Davis,          40,  52,  58,  59 

Warren  v.  Davenport  F.  Ins.  Co., 

44,  49 
Warshawky  v.  Anchor,  etc.,  Ins. 

Co.,  162,  319 

Warwick  v.  Monmouth,  etc.,  F. 

Ins.  Co.,  221 


are  to  Pages.] 
Washburn  v.  Miami  Valley  Ins. 

Co.,  212 

Washburn-Halligan,  etc.,  Co.  v. 

Merchants',  etc.,  Ins.  Co.,      228 
Washburn  Mill  Co.  v.  Fire  Ass'n, 

260 
Washington,  etc.,  Ins.  Co.  v.  Kelly, 

262,  276 
Washington    Mills   Mfg.   Co.   v. 

Weymouth  Ins.  Co.,  76 

Washington    Mut.    Ins.    Co.    v. 

Manufacturers',  etc.,  Ins.  Co., 

235 
Waterbury  v.   Dakota  F.   &   M. 

Ins.  Co.,  80,  101 

Waterhouse  v.  Gloucester  F.  Ins. 

Co.,  275 

Waters  v.  Merchants',  etc.,  Ins. 

Co.,  212 

Way  v.  Abington,  etc.,  Ins.  Co.,  196 
Weaver  v.  Weaver,  408 

Webb  v.  Protection,  etc.,  Ins.  Co., 

210 
Webster  v.  Dwelling  House  Ins. 

Co.,  253,  255 

Weed  v.  London,  etc.,  Ins.  Co.,  144 
Wehle  v.  United  States,  etc., 

Ass'n,  436 

Weide  v.  Germania  Ins.  Co.,  324 
Weidert  v.  State  Ins.  Co., 

140,  149,  289 
Weigle  v.  Cascade  F.  &  M.  Ins. 

Co.,  82 

Weiss  v.  American  F.  Ins.  Co.,  257 
Welch  v.  Union,  etc.,  Ins.  Co.,  69,  409 
Wells  v.  New  England,  etc.,  Ins. 

Co.,  418 

Wendt  v.  Iowa  L.  of  H.,  394 

Wenzel  v.  Commercial  Ins.  Co.,  274 
West  v.  Citizens'  Ins.  Co.,  267,  276 
West  Branch  Ins.  Co.  v.  Helfen- 

stein,  42,  276 

Westchester  F.  Ins.  Co.  v.  Mc- 

Adoo,  370 

v.  Wagner,  251 

Westenhaver    v.    German,    etc., 

Ins.  Co.,  349 


TABLE   OF    CASES. 


Iv 


[References 
Western  Assur.  Co.  v.  Decker, 

337,  349,  351 

v.  Mason,  171 

v.  McAlpin,  35 

v.  McCarty,  69,  322 

v.  Ray,  181 

v.  Redding,  327 

Western,   etc.,   Ass'n   v.    Smith, 

429,  431 

v.  South,  430 

Western,   etc.,   Ins.   Co.  v.   Put- 
nam, 352 
v.  Riker,                        256,  261,  265 
v.  Thorp,                                       317 
Western,  etc.,  Pipe  Lines  v. 

Home  Ins.  Co.,        42,  47,  78,  191 
Westfleld  Cigar  Co.  v.  Insurance 

Co.,  348 

Westmoreland  v.  Preferred,  etc., 

Ins.  Co.,  434 

Weston  v.  Richardson,  389 

Wetmore   v.    Mutual,    etc.,    Ins. 

Ass'n,  13 

Wheaton  v.  North  British,  etc., 

Ins.  Co.,  87 

Wheeland  v.  Atwood,  53,  59,  65 

Wheeler  v.  Connecticut,  etc.,  Ins. 

Co.,  314 

v.  Real  Estate  Title  Ins.,  etc., 

Co.,  472 

v.  Traders'  Ins.  Co., 

171,  176,  178,  282,  283 
v.  Watertown  F.  Ins.  Co.,          221 
Wheeling,  etc.,  Ins.  Co.  v.  Mor- 
rison, 45 
Whitaker  v.  Farmers'  Un.  Ins. 

Co.,  35 

White  v.  Connecticut,  etc.,  Ins. 

Co.,  300,  335 

v.  Equitable,  etc.,  Union,  17 

v.  Haight,  119 

v.  Madison,  48 

v.  Provident'  Sav.,  etc.,  Soc.,    105 

v.  Republic,  etc.,  Ins.  Co.,         194 

Whitehead  v.  Tuckett,  132 

Whitehouse    v.    Travelers'    Ins. 

Co.,  436 


are  to  Pages.] 

Whitehurst  v.   North   Carolina, 

etc.,  Ins.  Co.,  313 

Whiting  v.  Burkhardt,  276,  277 

Whitley  v.  Piedmont,  115 

Whitmarsh   v.   Conway   F.   Ins. 

Co.,  216 

Whitmore    v.    Dwelling    House 

Ins.  Co.,  317 

v.  Supreme  Lodge,  50,  52,  54 

Whitney  v.  American  Ins.  Co., 

260,  323,  379 
v.  Black  River  Ins.  Co., 

171,  230,  286 

v.  National,  etc.,  Ass'n,  129,  156 
Wholley  v.  Western  Assur.  Co.,  321 
Wicks  v.  Scottish  Union,  etc., 

Ins.  Co.,  299,  305 

Wiebeler  v.  Milwaukee,  etc., 

Ins.  Co;,  32 

Wierengo  v.   American   F.   Ins. 

Co.,  253,  255 

Wilcox  v.  Continental  Ins.  Co., 

220,  253,  255 

Wilkins  v.  State  Ins.  Co.,       141,  155 
v.  Tobacco  Ins.  Co.,  171 

Willard  v.  Masonic,  etc.,  Ass'n,    438 
Willcuts  v.  Northwestern,  etc., 

Ins.  Co.,  113 

Williams  v.  Delafield,  95 

v.  Hartford  Ins.  Co.,  366 

v.  Niagara  F.  Ins.  Co.,  320 

v.  People's  F.  Ins.  Co.,  282 

v.  Roger  Williams  Ins.  Co.,         40 
v.  Smith,  35 

v.  Vermont,  etc.,  Ins.  Co.,          359 
v.  Washington  L.  Ins.  Co.,        115 
Williamson    v.    Michigan,    etc., 

Ins.  Co.,  278 

Wilmaser  v.  Continental  L.  Ins. 

Co.,  389 

Wilson  v.  ^tna  Ins.  Co.,  359 

v.  Genesee,  etc.,  Ins.  Co.,  267 

v.  Hill,  27 

v.  Northwestern,    etc.,    Ass'n, 

437,  438 
Wilson  Drug  Co.  v.  Phoenix 

Assur.  Co.,  180 


Ivi 


TABLE   OF    CASES. 


[References 

Wingert  v.  Zeigler,  33 

Winsor   v.    Odd    Fellows',    etc., 

Ass'n,  384 

Wirgman  v.  Miller,  390 

Witherell  v.  Maine  Ins.  Co.,          210 
Woiten  v.  American,   etc.,   Ins. 

Co.,  412 

Wokal  v.  Belsky,  385 

Wolff  v.  Oswego,  etc.,  Ins.  Co.,     296 
Wood  v.  American  F.  Ins.  Co., 

267,  269,  272,  273 

v.  Firemen's  F.  Ins.  Co.,  100 

v.  North  Western  Ins.  Co.,        285 
v.  Rutland,  etc.,  Ins.  Co.,  42 

Woodbury  v.  Charter  Oak,  etc., 

Ins.  Co.,  221 

Wooddy  v.   Old   Dominion   Ins. 

Co.,  34 

Woodside  Brewing  Co.  v.  Pacific 

F.  Ins.  Co.,  257 

Workman  v.  Insurance  Co.,  184 

Worley  v.  State  Ins.  Co.,  286 

Worsley  v.  Wood,  319 

Worthingham  v.  Bearse,          43,  171 
Wright  v.  London  F.  Ins.  Ass'n,   202 


are  to  Pages.] 
Wright  v.  Mutual,  etc.,  Ass'n, 

53,  64,  69,  410 

v.  Susquehanna,  etc.,  Ins.  Co.,  338 
Wunderlich  v.  Palatine  F.  Ins. 

Co.,  173 

Wynkoop  v.  Niagara  F.  Ins.  Co.,  354 
Wytheville  Ins.  Co.  v.  Stultz, 

73,  98,  253 
Y 

Yoch  v.  Home,  etc.,  Ins.  Co.,  279,  281 
York   County,   etc.,   Ins.   Co.   v. 

Turner,  121 

Yost  v.  McKee,  243 

Young  v.  Eagle  F.  Ins.  Co.,  272 

v.  Grand  Lodge,  124 

v.  Travelers'  Ins.  Co.,        447,  448 
v.  Union  Ins.  Co.,  47 

Z 

Zalesky  v.  Home  Ins.  Co.,  339 

Zigler  v.  Phrenix  Ins.  Co.,  295 

Zimmerman  v.  Masonic  Aid  Ass'n, 

412 
v.  Home  Ins.  Co.,  140 


ELLIOTT  ON  INSURANCE. 


PART  I. 

OF  THE   CONTRACT  OF   INSURANCE,   AND   THE 
PRINCIPLES  BY  WHICH  IT  IS  GOVERNED. 


CHAPTEE  I. 

INTRODUCTORY. 

SEC.  SEC. 

1.  Sources  of  the  law  of  insurance.    4.  Its  growth  in  England. 

2.  Insurance  in  Roman  law.  5.  Growth  of  insurance  other  than 

3.  Its  development  on  the  continent.  marine. 

§  1.  Sources  of  the  law  of  insurance. — The  law  of  insurance  has 
been  developed  from  the  customs  of  merchants  and  the  maritime  law 
of  the  Middle  Ages.  For  many  years  marine  insurance  only  was 
known,  and  it  is  only  within  recent  years  that  the  contract  has  been 
applied  to  risks  other  than  those  of  the  sea.  As  late  as  1796  a  learned 
English  writer  said  that  "when  insurance  is  mentioned  by  profes- 
sional men  they  mean  marine  insurance."  But  by  the  beginning  of 
the  nineteenth  century  the  general  principles  upon  which  the  con- 
tract rests  were  reasonably  well  settled,  and  the  later  developments 
have  been  little  more  than  their  application  to  new  conditions. 

It  is  not  the  intention  in  the  limited  space  at  command  to  treat  of 
marine  insurance  in  detail,  but  it  must  necessarily  often  be  referred 
to,  as  historically  it  furnishes  the  broad  foundation  upon  which  the 
law  of  insurance  rests.1  As  we  trace  its  history  toward  its  uncertain 

'For  the  history  of  the  practice  Ins.  (5th  ed.,  1805),  Introd.;  Duer 
and  law  of  insurance,  see  Marshall  Marine  Ins.  (1845),  Introd.  Disc.; 

(1) 


§    1  THE   CONTRACT    OF    INSURANCE.  2 

origin  it  gradually  widens  from  judicial  decision  until  it  rests  upon 
the  broadest  principles  of  general  jurisprudence.  Many  distinguished 
writers  assert  that  the  law  of  insurance  is  a  part  of  the  law  of  nations, 
but  this  is  true  in  but  a  very  limited  sense.  Thus,  with  reference  to 
marine  insurance  and  maritime  law,  Blackstone  says2  that  "there  is 
no  other  rule  of  decision  but  this  unwritten  law  collected  from  the 
history  and  usage  of  such  writers  of  all  nations  as  are  generally  ap- 
proved and  allowed  of."  Emerigon  says3  that  it  belongs  rather  to 
the  usages  of  merchants  than  to  the  civil  or  municipal  law,  and 
"though  it  did  not  until  very  late  become  the  special  object  of  legisla- 
tion, it  is  not  the  less  regulated  by  the  general  principles  of  justice  and 
equity  that  abide  in  the  written  reason  of  the  law." 

In  studying  the  law  of  insurance  we  may  therefore  properly  follow 
the  example  of  Mansfield,  Story  and  Kent,  and  resort  to  those  ancient 
wells  of  learning  from  which  have  been  drawn  the  principles  which, 
although  established  for  the  protection  of  the  adventurous  merchants 
of  the  Middle  Ages,  are  every  day  applied  by  modern  courts  in  the 
decision  of  current  cases. 

These  laws  and  customs  are  found  in  various  collections.  The 
most  ancient  is  the  famous  Consolato  del  Mare,  which  was  in  force  at 
least  as  early  as  the  eleventh  century,  and  for  many  years  thereafter 
was  received  as  law  by  all  the  states  of  Southern  Europe.  It  con- 
tains no  reference  to  insurance  as  we  know  it,  but  does  show  that  a 
kind  of  mutual  insurance  was  then  in  use.4  Next  in  order  of  time 
come  the  Laws  of  Oleron,  which  were  in  force  by  the  middle  of  the 
thirteenth  century.  Oleron  was  an  island  on  the  coast  of  France, 
within  the  jurisdiction  of  the  ancient  province  of  Guienne.  There 
has  been  much  controversy  as  to  the  origin  and  value  of  these  laws. 
They  contain  no  reference  to  insurance,  but  this  does  not  prove  that 
it  was  not  in  use  among  the  French  merchants,  as  they  are  merely  rules 
for  the  government  of  mariners  at  sea  and  the  determination  of  the 
relations  between  sailors,  ship-owners  and  merchants. 

Near  the  close  of  the  thirteenth  century  we  find  a  collection  of  laws 

Joyce    Ins.    (1879),    Prelim.   Chap.;  Life  Insurance,  ch.  1;    9  American 

Kent's   Com.    (13th    ed.)    342,    487;  Cyclopedia  314. 

Emerigon     Trait6     des     Assurance  -  4  Bl.  Com.  (Hammond's  ed.),  ch. 

(Boulay-Paty's    ed.,    1827),    Preface  5,  p.  89. 

and  ch.  1;   Alauzet  Traite"   General  3  Emerigon        Ins.         (Meredith's 

des  Assurances,  early  chapters    of  Trans.),  4. 

Vol.  I;  Richards  Ins.,  ch.l;  Fire  and  4  Alauzet  Trait6  General  des  As- 
surances, Tom.  Prem.,  p.  42. 


3  INTRODUCTORY.  §    1 

made  by  the  merchants  and  masters  of  the  "Magnificent  City  of  Wis- 
buy."  They  greatly  resemble  the  Laws  of  Oleron,  and  for  many 
years  were  accepted  by  the  states  of  Northern  Europe.  They  also 
are  laws  governing  navigation  and  not  commerce,  and  hence  we  do 
not  expect  to  find  in  them  any  distinct  allusion  to  the  practice  of  in- 
surance.5 

The  laws  of  the  Hanse  towns,  published  about  1593,  are  very  simi- 
lar to  those  of  Oleron  and  Wisbuy.  They  mention  bottomry,  but  not 
insurance.  Duer  says6  that,  "The  merchants  of  the  Hanseatic  league, 
when  these  laws  were  compiled,  had  been  for  nearly  three  centuries 
the  carriers  of  Northern  Europe,  and  during  the  whole  of  that  period 
had  been  accustomed  to  meet  the  merchants  of  Italy,  Spain,  Prance 
and  England  at  the  staple  towns  they  had  established  in  Flanders, 
Antwerp  and  Bruges.  That  in  1597,  and  even  in  1614  (for  in  that 
year  their  original  laws  were  revised  and  enlarged,  still  omitting  the 
subject  of  insurance),  they  alone  were  ignorant  of  the  practice  that 
had  prevailed  for  centuries  among  the  merchants  of  the  rest  of 
Europe,  it  would  be  irrational  to  believe;  nor  is  it  difficult  to  assign 
the  reason  for  their  omitting  at  this  time  to  make  any  special  regu- 
lations relative  to  insurance.  An  ample  ordinance  on  that  subject 
was  published  at  Antwerp,  under  the  authority  of  Philip  II,  in  the 
year  1563,  and  the  conjecture  is  more  than  probable  that  the  rules 
of  this  ordinance  were  adopted  and  deemed  sufficient  by  all  the  mer- 
chants of  the  north  of  Europe.  Of  the  existence  and  provisions  of 
such  an  ordinance,  in  a  city  which  was  then  a  place  of  common  and 
chief  resort,  they  could  not  have  been  ignorant." 

The  celebrated  Ordinance  of  Marine  of  Louis  XIV  was  published 
under  the  auspices  of  Colbert  in  1691,  and  was  the  first  complete 
code  of  maritime  and  commercial  law;  and  "when  we  consider  the 
originality  and  extent  of  the  design  and  the  ability  with  which  it  is 
executed,  we  shall  not  hesitate  to  admit  that  it  deserves  to  be  ranked 
among  the  noblest  works  that  legislative  genius  and  learning  have 
ever  accomplished."  The  part  which  relates  to  insurance  is  the  basis 
of  the  present  French  law  upon  the  subject  and  is  embodied  in  Na- 
poleon's justly  famous  code. 

The  Ordinances  of  Barcelona  are  the  most  ancient  of  those  which 

"Marshall     Ins.     (5th     Am.     ed.,         °  Duer    Mar.    Ins.,    Tntrod.    Disc., 
1805),    Pre.    Disc.;    Emerigon    Ins.,     47. 
Pref.  xiii;  Duer  Mar.  Ins.  41,  note. 


§    2  THE    CONTRACT   OF   INSURANCE.  4 

treat  expressly  of  insurance.     A  translation  of  all  the  foreign  or- 
dinances on  this  subject  was  published  by  Mageiis. 

Space  will  allow  for  little  more  than  the  names  of  the  famous  com- 
mentators who  have  by  their  genius  thrown  light  upon  this  field  of 
the  law.  The  most  ancient  treatise  is  Le  Guidon  de  la  Mer,  which 
is  found  in  a  collection  published  at  Kouen  by  Cleriac  in  1671,  but 
without  any  account  of  its  origin.  It  was  doubtless  written  near  the 
close  of  the  preceding  century.  It  is  well  arranged,  and  many  of 
the  rules  have  entered  into  the  general  law  of  the  subject.  The  essay 
of  Koccus,  translated  by  an  American  lawyer  and  published  in  this 
country,  is  still  frequently  cited.  Of  the  famous  treatises  of  Pothier, 
Valin  and  Emerigon,  I  can  do  no  better  than  follow  the  example  of 
Duer,  and  quote  the  language  of  Chancellor  Kent.  "Valin's  copious 
commentary  upon  that  part  of  the  Ordinance  of  Louis  XIV,  which 
relates  to  insurance,  is  deserving  of  great  attention,  and  it  has  uni- 
formly, and  everywhere,  received  the  tribute  of  the  highest  respect  for 
the  good  sense,  sound  learning  and  weight  of  character  which  are  at- 
tached to  his  luminous  reflections.  Pothier's  essay  on  insurance  is 
a  concise,  conspicuous,  accurate  and  admirable  elementary  digest  of 
the  principles  of  insurance,  and  it  contains  the  fundamental  doctrines 
and  universal  law  of  the  contract.  But  the  treatise  of  Emerigon 
very  far  surpasses  all  preceding  works  in  the  interest,  value  and  prac- 
tical application  of  its  principles.  It  is  the  most  elaborate,  learned 
and  finished  production  on  the  subject.  He  professedly  carried  his 
researches  into  the  antiquities  of  the  maritime  law,  and  illustrated 
the  ordinances  by  what  he  terms  the  jurisprudence  of  the  tribunals; 
and  he  discussed  all  incidental  questions,  so  as  to  bring  within  the 
compass  of  his  work  a  great  portion  of  international  and  commercial 
law  connected  with  the  doctrines  of  insurance.  In  the  language  of 
Lord  Tenterden,  no  subject  in  Emerigon  is  discussed  without  being 
exhausted ;  and  the  eulogy  is  as  just  as  it  is  splendid." 

§  2.  Insurance  in  Roman  law. — It  is  uncertain  whether  the  con- 
tract of  insurance  was  known  to  the  Romans,  but  the  weight  of  argu- 
ment leads  us  to  believe  thai  it  was  in  common  use.  The  leading 
writers  who  assert  the  contrary,  such  as  Parke  and  Marshall,  are 
largely  influenced  by  the  fact  that  the  Eoman  law,  as  it  has  come 
down  to  us,  has  few,  if  any,  references  to  such  a  contract.  The 
contracts  of  bottomry  and  respondentia — the  loan  of  money  on  a 
vessel  or  a  cargo,  to  be  paid  only  in  the  event  of  its  safe  arrival — were 


5  INTRODUCTORY.  §    2 

well  known  and  in  extensive  use.  The  titles  which  cover  these  sub- 
jects are  among  the  most  ample  and  instructive,  hut  neither  the  In- 
stitutes, Pandects,  Code  or  Novels,  nor  the  laws  of  the  Emperors  after 
Justinian,  contain  any  trace  of  the  existence  of  insurance  as  a  dis- 
tinct and  independent  contract. 

Notwithstanding  this,  the  probabilities  are  greatly  in  favor  of  its 
existence.  Certain  references  are  found  which  seem  to  point  to  the 
practice  of  insurance.  Emerigon  cites  two  instances  in  Eoman  his- 
tory.7 We  are  told  by  Livy8  that  during  the  republic  the  govern- 
ment, for  the  purpose  of  encouraging  merchants  who  had  contracted 
to  supply  the  army  abroad  with  provisions,  agreed  to  bear  all  losses 
that  might  happen  to  the  cargoes  during  the  voyage  from  perils  of 
the  sea,  or  hostile  capture.  So  Suetonius9  says  that  during  a  period 
of  apprehended  scarcity  at  Rome  the  Emperor  Claudius  offered  a  sim- 
ilar immunity  to  those  who  would  bring  provisions  to  the  city.  This 
was  neither  more  nor  less  than  an  insurance  by  the  government,  and 
the  consideration  or  premium  therefor  was  the  public  benefit  accruing 
therefrom.10  It  is  true  that  it  does  not  prove  the  existence  of  in- 
surance as  a  private  contract,  but  it  shows  that  merchants  were 
familiar  with  the  idea  of  such  protection,  and  increases  the  probability 
that  it  was  not  unknown  to  them  in  their  private  transactions. 

This  silence  of  the  Code  of  Justinian  can  perhaps  be  satisfactorily 
accounted  for  upon  the  theory  that  it  was  not  intended  to  include  the 
entire  body  of  what  we  would  call  the  common  law  of  the  empire, 
such  as  the  customs,  usages  and  the  law  merchant.  We  know  that  for 
over  a  thousand  years  Eoman  merchants  carried  on  a  commerce  greater 
in  volume  than  that  of  all  Europe  at  the  close  of  the  seventeenth 
century,11  and  from  this  we  infer  that  there  must  have  been  laws 
defining  the  relative  rights  and  duties  of  the  owners,  seamen  and 
masters  of  vessels.  But  nothing  of  the  kind  is  found  in  the  Code. 

7  See   Emerigon   Ins.    (Meredith's    nity  instead  of  the  adoption  of  the 
ed.),  ch.  1,  §  1;  Marshall  Ins.,  Pref.    present  system  of  capture  of  pri- 

8  Livy,  L.  23,  ch.  49,  L.  25,  ch.  3.        vate  property.     See  address  of  Mr. 
•  Suetonius,  L.  25,  ch.  2.  Angiers,   Report,   p.   278.     See   also 
"Similar    plans    for    government    article  "Ought  the  State  to  Cover 

insurance  during  maritime  war  are  Maritime  War  Risks?"  by  Sir  John 

still  urged.    At  the  Rouen  confer-  Glover    in    Contemporary    Review 

ence,  1900,  of  the  International  Law  for  May,  1898. 

Association,  it  was  stated  that  the        "  Cicero  Epist.  ad  Attic.  IV,  ch. 

merchants  of  Great  Britain  favored  i,  ii,  ill. 

this  system  of  government  indem- 


§    2  THE   CONTRACT    OF    INSURANCE.  6 

It  is  probable  that  these  matters  were  governed  entirely  by  the 
customs  of  merchants,  which  were  based  upon  rules  adopted  from 
the  famous  laws  of  the  Ehodians.12  We  know  that  during  the  Middle 
Ages  the  maritime  law  of  Europe  was  a  body  of  customs  developed 
by  the  merchants  and  enforced  by  arbitration  and  by  special  tribunals 
existing  among  themselves  for  the  purpose  of  deciding  their  contro- 
versies without  resort  to  the  ordinary  judicial  tribunals.  Probably 
the  same  was  true  in  Home,  and  if  so,  it  explains  the  absence  of  any 
reference  to  the  contract  of  insurance  in  the  works  of  the  Roman 
jurisconsults.  Duer  gives  an  ingenious  explanation  of  the  difficulty 
suggested  by  the  full  treatment  of  the' analogous  contracts  of  bottomry 
and  respondentia.  The  Eoman  patricians  and  senators  were  the  capi- 
talists of  the  world,  and,  while  not  directly  engaged  in  trade,  were 
always  willing  to  loan  their  money  at  high  rates  of  interest  to  the 
merchants  at  home  and  in  the  provinces.  These  merchants,  de- 
siring large  loans  on  bottomry,  resorted  to  the  gentlemen  at  Rome, 
and  out  of  such  large  dealings  there  resulted  controversies  which 
naturally,  at  least  after  a  time,  came  within  the  jurisdiction  of  the 
ordinary  courts.  The  contract,  not  being  subject  to  the  usury  laws, 
became  a  prime  favorite  with  these  patrician  usurers,  and  the  jurists, 
who  belonged  to  the  same  class,  soon  created  an  elaborate  body  of 
rules  for  its  government.  Duer  says:13  "When  Trebonian  and  his 
associates,  under  the  auspices  and  orders  of  Justinian,  commenced 
their  labors,  an  ample  code  of  maritime  law,  probably  embracing  all 
the  subjects  which  they  omitted,  was  not  only  in  existence,  but  was  in 
actual  force  as  law  throughout  the  empire,  and  had  been  so  for  ages." 

These  were  the  laws  of  Rhodes,  framed  in  the  days  of  her  grandeur, 
when  she  claimed  dominion  over  the  sea.  In  the  early  years  of 
Augustus  these  laws  were  adopted  and  declared  a  part  of  the  laws  of 
the  empire.14  In  a  subsequent  age,  Antoninus  Pius,  in  a  truly  imperial 
edict,  says:  "The  earth  is  subject  to  my  dominion;  the  sea  to  that 
of  the  law.  Let  the  case  be  determined  by  the  Rhodian  law  on  naval 
affairs,  the  provisions  of  which  I  direct  to  be  observed  in  the  future 

11  That  the  collection  of  laws  pur-  Cujas  maintains  that  in  all  maritime 
porting  to  be  the  laws  of  Rhoues  questions  the  Romans  ought  to  ad- 
are  spurious,  see  Johnson's  transla-  here  to  the  laws  of  Rhodes,  if  there 
tion  of  Azuni,  Vol.  I,  p.  286,  note;  is  no  particular  law  existing  to  the 
Duer  Mar.  Ins.  26.  contrary,  and  this  is  in  conformity 
uDuer  Mar.  Ins.  24.  with    the    direction    of    Augustus." 
"Azuni     says:     "The     celebrated  Maritime  Law,  Vol.  I,  p.  271. 


7  INTRODUCTOEY.  §    3 

in  all  cases  where  they  are  not  repugnant  to  the  laws  of  Rome.  The 
same  decision  was  formerly  made  by  the  divine  Augustus." 

This  edict  was  republished  by  Justinian  and  inserted  in  the  Pan- 
dects. We  thus  find  that  the  Rhodian  sea  laws  were  by  reference  and 
adoption  incorporated  into  the  code.  They  were  already  collected 
and  published  in  an  appropriate  form,  and  further  codification  was 
therefore  not  necessary.  No  collection  of  these  laws  has  come  down 
to  us,  and  they  are  known  only  by  name. 

It  is  thus  more  than  probable  that  the  Romans  were  familiar  with 
the  practice  of  insurance.  They  were  bold  navigators,  and  when  we 
consider  the  character  of  their  vessels,  it  is  safe  to  assume  that  the 
risks  and  perils  of  the  sea  to  which  they  subjected  their  cargoes  were 
greater  than  those  taken  by  modern  commerce.  Insurance  seems  to 
grow  naturally  out  of  an  extensive  commerce,  and  it  is  almost  im- 
possible to  believe  that  without  its  protection  the  flourishing  com- 
merce of  Tyre,  Carthage,  Corinth,  Athens,  Rhodes  and  Alexandria 
could  have  been  successfully  carried  on  through  so  many  ages. 

§  3.  Its  development  on  the  Continent. — It  was  during  the  Middle 
Ages,  in  connection  with  the  rise  of  commerce,  that  insurance  was  first 
fully  developed,  if  not  invented,  by  the  merchants  of  northern  Italy. 
It  has  been  suggested  that  it  was  brought  into  Italy  by  the  Jews  after 
their  expulsion  from  France  in  1182.15  Emerigon  says  that  the  con- 
tract first  received  its  name  and  form  in  Italy,  although  it  had  been 
known  in  substance  in  other  places  for  many  years.  The  common 
name  of  the  contract  is  of  Italian  derivation,  and  means  a  memoran- 
dum  in  writing.16  Reference  has  already  been  made  to  the  famous 
sea  laws  which  were  promulgated  during  this  period.  It  is  impos- 
sible to  fix  the  exact  date  when  insurance  began  to  be  used,  but  it  was 
in  general  use  as  early  as  the  twelfth  century. 

§  4.  Its  growth  in  England. — Certain  writers  claim  that  the  prac- 
tice of  marine  insurance  was  in  use  in  England  before  it  was 
known  on  the  Continent.  But  it  is  practically  certain  that  it  was 
brought  there  by  the  Italian  merchants  who  established  themselves 
in  Lombard  street.  For  many  years  it  was  known  only  as  a  custom 
among  merchants.  By  1548  it  had  become  so  common  that  Lord 

"  See  Duer  Mar.  Ins.,  Int.  Disc.,        19  Policy,   Italian  "polizza." 
p.  30;' Anderson  History  of  Com.  82. 


§   4  THE   CONTRACT   OF   INSURANCE. 

Bacon,  in  opening  Elizabeth's  first  parliament,  said :  "Doth  not  the 
wise  merchant,  in  every  adventure  of  danger,  give  part  to  have  the 
rest  insured  ?"  The  first  reported  case  as  referred  to  by  Lord  Coke  in 
Dowdale's  Case,  was  decided  in  1588.17  It  was  held  that  "where  as 
well  the  contract  as  the  performance  of  it  is  wholly  made  or  to  he 
done  beyond  sea,  it  is  not  triable  under  our  law,  but  if  the  promise 
be  made  in  England  it  shall  be  tried."  The  idea  still  prevailed,  how- 
ever, that  this  peculiar  contract  of  merchants,  and  the  controversies 
arising  out  of  it,  should  be  construed  by  special  tribunals,  such  as  the 
famous  Tribunal  of  the  Mercanzia,  which  held  its  sessions  at  Florence 
and  heard  appeals  in  bankruptcy  and  insurance  cases  from  all  parts 
of  Europe. 

The  first  English  statute  relating  to  this  subject  is  43  Eliz.,  ch.  12, 
from  which  it  is  apparent  that  the  contract  was  then  well  known  in 
England,  and  also  that  it  was  customary  to  settle  controversies  arising 
thereunder  by  arbitration  among  merchants.  The  object  of  this  stat- 
ute was  to  prevent  parties  from  resorting  to  the  ordinary  courts.  It  is 
recited  that  "of  late  years  divers  persons  have  withdrawn  themselves 
from  that  arbitrary  course  and  have  sought  to  draw  the  parties  as- 
sured, to  seek  their  moneys  of  every  several  assurer,18  by  suits  com- 
menced in  her  Majesty's  courts,  to  their  great  charges  and  delays." 

Commenting  on  this,  a  well-known  writer  says  that :  "Before  the 
passing  of  this  act  almost  all  disputes  arising  upon  contracts  of  in- 
surance were  settled  and  adjusted  by  arbitration  without  resorting 
to  any  legal  proceedings,  and  there  seems  to  have  been  a  particular 
tribunal  for  such  arbitrations  established  in  London  composed  of 
persons  annually  appointed  by  the  lord  mayor,  in  imitation  of  some 
such  establishments  in  other  countries."  Malynes  informs  us  that 
there  was  an  office  of  assurance  in  the  west  side  of  the  Eoyal  Exchange 
where  insurances  were  made,  and  to  which  belonged  certain  commis- 
sioners who  were  annually  chosen  and  who  were  probably  the  grave 
and  discreet  merchants  alluded  to  in  the  recital.  The  act  also,  some- 
what inconsistently,  recites:  "Whereas,  heretofore  assurers  have 
used  to  stand  so  justly  on  their  credits,  that  few  or  no  controversies 
have  arisen  thereupon;  and  if  any  have  grown,  the  same  have,  from 
time  to  time,  been  ended  and  ordered  by  certain  grave  and  discreet 
merchants  appointed  by  the  lord  mayor  of  London,  as  men,  by  reason 

"Dowdale's  Case,  6  Coke  47b,  4  18  It  will  be  remembered  that  a 
Inst.  142.  risk  might  be  underwritten  by  many 

individuals. 


9  INTRODUCTORY.  §    4 

of  their  experience,  fittest  to  understand,  and  speedily  to  decide  those 
causes."  It  is  further  said,  in  the  archaic  language  of  the  time: 
"Whereas,  it  ever  hathe  bene  the  policie  of  this  realme  by  all  good 
means  to  comforte  and  encourage  the  merchante,  therebie  to  advance 
and  increase  the  generall  wealth  of  the  realme,  her  Majestie's  cus- 
tomes,  and  the  Strength  of  Shippinge,  which  Consideracion  is  nowe 
the  more  requisite  because  trade  and  traffique  is  not  at  this  present 
soe  open  as  at  other  tymes  it  hathe  bene.  And,  whereas  it  hathe  bene 
tyme  out  of  mynde  an  usage  among  the  merchantes,  both  of  this 
realme  and  of  foraine  nacyons,  when  they  make  any  great  adventure 
(especiallie  into  remote  parts),  to  give  some  Consideration  of  money 
to  other  persons  (which  commonlie  are  in  no  small  number),  to  have 
from  them  assurance  made  for  their  goodes,  merchandize,  ships  and 
things  adventured,  or  some  parts  thereof,  at  such  rates  and  in  such 
sorte  as  the  parties  assurers  and  the  parties  assured  can  agree,  which 
course  of  dealinge  is  commonlie  termed  a  policie  of  assurance,"  etc. 
This  court,  or  rather  commission,  was  composed  of  a  judge  of  ad- 
miralty, the  recorder  of  London,  two  doctors  of  the  civil  law,  two 
common  lawyers  and  eight  grave  and  discreet  merchants,  or  any  five  of 
them.  Its  powers  were  not  exclusive  and  its  judgments  were  no  bar 
to  an  action  at  law,  and  finally  "prohibitions  to  restrain  them  were 
issued  and  the  court  fell  into  disuse."19 

Beginning  with  this  statute,  we  find  parliament,  through  numerous 
acts,  regulating  the  contract  and  the  manner  of  its  making  and  en- 
forcement.20 Comparatively  few  cases  arose,  however,  until  the  time 
of  Lord  Mansfield.  This  great  jurist  soon  obtained  control  over  such 
litigation  and  laid  the  foundations  of  the  law  upon  those  great  princi- 
ples by  which  it  is  still  largely  governed.  Speaking  of  Mansfield's 
work  in  this  respect,  Marshall  says:21  "The  great  increase  of  insur- 
ance not  only  upon  British  commerce,  but  likewise  upon  that  of  other 
countries,  produced  about  this  time  a  number  of  causes  upon  this  sub- 
ject, to  which  it  became  necessary  for  him  to  turn  his  particular  atten- 
tion ;  and,  indeed,  he  seems  to  have  taken  pleasure  in  the  discussion  of 
questions  arising  upon  this  contract,  in  which  more,  perhaps,  than 
upon  any  other  subject  he  displayed  the  powers  of  his  great  and  com- 
prehensive mind.  From  the  books  of  the  common  law  very  little  could 
be  obtained,  but  upon  the  subject  of  marine  law,  and  the  particular 

19 1  Smith  Merc.  Law  (1890),  ix.  "  Marshall  Ins.  28. 

20  These  statutes  are  collected   in 
a  note  to  Joyce  Ins.  19. 


THE    CONTRACT   OF   INSURANCE. 


10 


subject  of  insurances,  the  foreign  authorities  were  numerous,  and  in 
general  very  satisfactory.  From  these,  and  from  the  information  of 
intelligent  merchants,  he  drew  those  leading  principles  which  may 
be  considered  as  the  common  law  of  the  sea,  and  the  common  law  of 
merchants,  which  he  found  prevailing  throughout  the  commercial 
world,  and  to  which  almost  every  question  of  insurance  was  easily 
referable.  Hence  the  great  celebrity  of  his  judgments  upon  such 
questions,  and  hence  the  respect  they  commanded  in  foreign  coun- 
tries."22 


"Lord  Campbell  thus  describes 
Lord  Mansfield's  methods:  "When 
questions  necessarily  arose  respect- 
ing the  buying  and  selling  of  goods, 
respecting  the  affreightment  of 
ships,  respecting  marine  assurances, 
and  respecting  bills  of  exchange  and 
promissory  notes,  no  one  knew  how 
they  were  to  be  determined.  Not  a 
treatise  had  been  published  upon 
any  of  these  subjects,  and  no  cases 
respecting  them  were  to  be  found  in 
our  books  of  reports,  which 
swarmed  with  decisions  about  lords 
and  villains,  about  marshaling  the 
champions  upon  the  trial  of  a  writ 
of  right  by  birth,  and  about  the  cus- 
tom of  manors  whereby  an  unchaste 
widow  might  save  the  forfeiture  of 
her  dower  by  riding  on  a  black  ram 
and  in  plain  language  confessing 
her  offense.  Lord  Hardwicke  had 
done  much  to  improve  and  system- 
atize equity,  but  proceedings  were 
still  carried  on  in  the  courts  of  com- 
mon law  much  in  the  same  style  as 
in  the  days  of  Sir  Robert  Tresilian 
and  Sir  William  Gascoigne.  Mer- 
cantile questions  were  so  ignorantly 
treated,  when  they  came  into  West- 
minster Hall,  that  they  were  usually 
settled  by  arbitration  among  the 
merchants  themselves.  If  an  action 
turning  upon  a  mercantile  question 
was  brought  in  a  court  of  law,  the 
judges  submitted  it  to  the  jury,  who 
determined  it  according  to  their 


own  notions  of  what  was  fair,  and 
no  general  rule  was  laid  down 
which  could  afterwards  be  referred 
to  for  the  purpose  of  settling  simi- 
lar disputes.  *  *  *  He  (Lord  Mans- 
field) saw  the  noble  field  that  lay 
before  him,  and  he  resolved  to  reap 
the  rich  harvest  of  glory  which  it 
presented  to  him.  Instead  of  pro- 
ceeding by  legislation,  and  attempt- 
ing to  codify,  *  *  *  he  wisely 
thought  it  more  according  to  the 
genius  of  our  institutions  to  intro- 
duce his  improvements  gradually, 
by  way  of  judicial  decision.  As  re- 
spected commerce,  there  were  no 
vicious  rules  to  be  overturned — he 
had  only  to  consider  what  was  just, 
expedient,  and  sanctioned  by  the  ex- 
perience of  nations  farther  ad- 
vanced in  the  science  of  jurispru- 
dence. His  plan  seems  to  have  been 
to  avail  himself,  as  often  as  oppor- 
tunity permitted,  of  his  ample  stores 
of  knowledge,  acquired  from  his 
study  of  the  Roman  Civil  Law,  and 
of  the  juridical  writers  produced 
in  modern  times  by  France,  Ger- 
many, Holland  and  Italy,  not  only  in 
doing  justice  to  the  parties  litigat- 
ing before  him,  but  in  settling  with 
precision,  and  upon  sound  princi- 
ples, a  general  rule,  afterwards  to 
be  quoted  and  recognized  as  govern- 
ing all  similar  cases.  Being  still  in 
the  prime  of  life,  with  a  vigorous 
constitution,  he,  no  doubt,  fondly 


11  INTRODUCTORY.  §    5 

No  sketch,  however  brief,  of  the  rise  of  the  law  of  insurance  in 
England  is  complete  without  a  reference  to  Lloyds.  Near  the  be- 
ginning of  the  eighteenth  century  one  Lloyd  opened  a  coffee-house 
in  Abchurch  lane,  in  London,  which  became  a  resort  for  merchants 
and  others  engaged  in  the  maritime  trade.  Some  of  these  were  en- 
gaged in  underwriting  insurance,  and  the  place  soon  became  identified 
with  them  and  their  business.  In  1696  the  proprietor  started  a  news- 
paper called  "Lloyds  News,"  which  had  for  its  object  the  dissemination 
of  commercial  intelligence,  but  departing  from  this  field  and  printing 
certain  proceedings  of  the  house  of  lords,  it  fell  under  the  displeasure 
of  that  body  and  was  suppressed.  In  1726  the  paper  was  revived 
under  the  name  of  "Lloyds  Lists,"  and  under  that  name  became 
famous  in  the  commercial  world.  In  1669  the  merchants,  who  were 
in  the  habit  of  meeting  at  Lloyds  for  the  transaction  of  their  business, 
formed  themselves  into  a  society,  and  adopted  certain  rules  for  their 
government.  Soon  after  this  organization  was  effected  the  society 
adopted  a  form  of  policy  known  as  Lloyds  policy,  which  is  the  basis 
of  the  policy  now  in  use  in  England  and  America.  It  was  customary 
among  the  merchants  at  the  coffee-house  to  pass  around  a  proposed 
policy,  and  each  individual  who  cared  to  do  so  wrote  his  name  thereon 
for  the  amount  of  the  risk  he  was  willing  to  assume.  Finally,  in  1871, 
the  "Society  of  Lloyds"  was  incorporated,  and  it  still  exists  as  one 
of  the  great  factors  in  commercial  life. 

§  5.  Growth  of  insurance  other  than  marine. — It  is  a  remarkable 
fact  that  only  insurance  against  the  perils  of  the  sea  was  practiced,  at 
least  to  any  great  extent,  until  within  recent  years.  In  a  standard 
English  work,  which  assumed  to  cover  the  entire  subject  of  insurance, 
published  in  1803,  we  find  less  than  fifty  pages  devoted  to  all  kinds 
of  insurance  other  than  marine  insurance.  In  closing  his  discussion 
of  life  insurance,  the  learned  author  says :  "I  have  now  gone  through 
all  that  seemed  to  be  material  upon  the  subject  of  insurance  upon  lives, 
from  which  it  appears  that  many  of  the  principles  which  govern 
marine  insurances  are  also  applicable  to  this  contract.  Considering 
the  great  multiplicity  of  insurances  which  have  of  late  years  been  made 
upon  lives,  the  number  of  litigated  cases  that  have  arisen  upon  them  is 
extremely  small.  One  principal  reason  is  that  the  happening  of  the 

hoped   that   he   might   live   to   see     collected  and  methodized  into  a  sys- 
these  decisions  embracing  the  whole     tern  which  might  bear  his  name." 
scope  of    commercial    transactions, 


§    5  THE   CONTRACT   OF   INSURANCE.  12 

event  insured  against  is  always  a  fact  of  easy  proof,  which  can  scarcely 
ever  afford  any  subject  of  dispute.  Another  is  the  great  difficulty  of 
practicing  any  fraud  in  such  insurances.  But  to  no  cause  is  this  for- 
tunate circumstance  more  to  be  ascribed  than  to  the  honor,  integrity 
and  liberality  of  the  several  companies  engaged  in  this  branch  of  in- 
surance." The  same  writer  considers  it  necessary  to  discuss  the  desir- 
ability and  public  policy  of  fire  insurance.  He  says  that,  "I  have  not 
been  able  to  ascertain  the  period  of  the  introduction  of  insurance 
against  fire  in  this  country,  but  it  has  certainly  been  in  use  here  con- 
siderably more  than  a  century.  Of  late  years,  notwithstanding  the 
very  heavy  stamp  duty  imposed  on  these  insurances,  they  have  been 
brought  into  very  general — I  might  almost  have  said,  universal — use 
in  this  country/'24 

The  earliest  English  life  insurance  company  was  organized  in  1706 
under  the  name  of  the  Amicable  Society  for  a  Perpetual  Assurance 
Office.  The  plan  was  very  simple.  Only  those  between  the  ages  of 
twelve  and  fifty-five  were  admitted,  and  all  were  required  to  make  a 
fixed  yearly  contribution,  which  was  divided  among  the  representa- 
tives of  those  who  died.  There  are  some  traces  of  life  insurance  to  be 
found  in  very  early  times.  It  is  certainly  older  than  fire  insurance. 
The  earliest  English  stock  company  was  organized  in  1710,  although 
a  similar  business  had  been  carried  on  in  London  as  early  as  1681. 
The  modern  system  of  life  insurance  probably  began  with  the  Equi- 
table Assurance  Society  of  London,  which  commenced  business  in 
1762.  Very  soon  after  this,  in  1769,  a  company  was  organized  in 
Pennsylvania  for  the  purpose  of  providing  protection  for  the  families 
of  Presbyterian  clergymen. 

The  first  American  company  was  the  Philadelphia  Contributorship 
for  Insuring  Houses  from  Loss  by  Fire,  which  was  incorporated  by 
Benjamin  Franklin  and  his  associates  in  1762.25  The  first  reported 
case  in  this  country  was  Lord  v.  Ball,26  decided  by  the  supreme  court 
of  Massachusetts  in  1809,  in  which  it  was  held  that  life  insurance  con- 
tracts were  valid,  although  not  authorized  by  statute.  The  principle 
of  the  mutual  insurance  system  is  of  very  ancient  origin,  and  the  mod- 
ern form  can  well  be  connected  with  the  ancient  guilds  and  friendly 
societies.  Similar  organizations  have  been  known  since  the  earliest 
times,27  but  it  is  only  within  recent  years  that  they  have  assumed  their 

*  Marshall  Ins.  679.  "Fortnightly     Review      (N.     S.) 

»13  Enc.  Brit.  161.  1864,  p.  318;  9  Enc.  Brit.  780. 

"12  Mass.  115. 


13  INTRODUCTOKY.  §    5 

present  form.  The  first  American  life  insurance  case  in  which  this 
kind  of  insurance  was  considered  arose  in  Louisiana  in  1871. 28  The 
first  accident  company  was  organized  in  London  in  1849,  and  the 
practice  of  insuring  real  estate  titles  began  in  1876.  At  present  a 
company  can  be  found  ready  to  insure  against  almost  every  conceiv- 
able risk — from  the  merchant's  ever-present  perils  of  the  sea  to  the 
surgeon's  equally  imminent  danger  from  actions  for  malpractice. 

"Wetmore   v.   Mutual,   etc.,   Ins.  Ass'n,  23  La.  An.  770. 


CHAPTEK  II. 

DEFINITION,  NATURE  OF  CONTRACT,  AND  MANNER  OF  ITS  MAKING. 
SEC.  SEC. 

6.  Definition.  20.  Indemnity     in     accident    insur- 

7.  Different  kinds  of  insurance.  ance. 

8.  What   constitutes   insurance.  21.  Subrogation. 

9.  Reinsurance.  22.  Loss  caused  by  negligence. 

10.  Parties.  23.  Form  of  contract. 

11.  The  insured.  24.  Statutory  form — Conditions  im- 

12.  The    insurer — Foreign    corpora-  plied  in  oral  contract. 

tions — State  control.  25.  Statute  of  frauds. 

13.  Mutual   companies  and   benevo-     26.  Renewal  by  parol. 

lent  societies.  27.  Effect  of  charter  provisions. 

14.  The  risk.  28.  Revenue  stamps. 

15.  A  personal  contract.  29.  Enforcement  of  oral  contract. 

16.  A  conditional  contract.  30.  Kinds  of  policies. 

17.  An  aleatory  contract.  31.  Completion    of    contract — Deliv- 

18.  Indemnity.  ery  of  policy. 

19.  Life  insurance  not  a  contract  of     32.  Countersigning  by  agent. 

indemnity.  33.  Contracts   made   by  correspond- 

ence. 

§  6.  Definition. — In  the  most  general  sense,  insurance  is.  a  con- 
tract, for  a  consideration,  to  pay  a  sum  of  money  upon  the  happening 
of  a  contemplated  event.  This  may  be  an  event  which  is  certain  to 
happen,  such  as  death,  or  a  mere  possibility,  such  as  fire  or  disaster  at 
sea.  Originally  insurance  was  confined  to  protection  against  the 
dangers  of  the  sea,  but  the  different  kinds  have  now  become  as  com- 
mon as  the  risks  to  which  life  and  property  are  subject.  If  we  except 
life  insurance,  which  has  features  peculiar  to  itself,  insurance  may  be 
defined  as  a  contract  where  for  a  stipulated  consideration  one  party 
undertakes  to  indemnify  another  against  loss  or  damage  on  a  desig- 
nated subject-matter  by  certain  contemplated  perils.  The  kind  of  in- 
surance is  determined  by  the  nature  of  the  peril  or  of  the  subject- 
matter.1 

1  Numerous  definitions  are  quoted  in  People  v.  Rose,  174  111.  310,  Wood- 
ruff Ins.  Gas.  16  (1898). 

(14) 


15  DEFINITION,    NATURE,   AND    MANNER   OF    MAKING.  §    ? 

§  7.  Different  kinds  of  insurance. — Fire  insurance  is  a  contract 
whereby  one  party,  for  a  consideration,  agrees  to  indemnify  another 
against  loss  or  damage  to  property  by  fire. 

Life  insurance  is  a  contract  whereby  the  insurer,  in  consideration 
of  a  certain  sum,  paid  in  gross  or  in  annual  payments,  agrees  to  pay 
the  person  in  whose  favor  the  insurance  is  made  a  certain  sum  of 
money  or  an  annuity  in  the  event  of  the  death  of  the  person  whose 
life  is  insured. 

Accident  insurance  is  a  contract  whereby  one,  for  a  consideration, 
agrees — 

(a)  to  indemnify  another  against  personal  injury  resulting  from 
accidents,  and 

(&)  to  pay  another  a  certain  sum  in  case  of  the  death  of  the  in- 
sured, caused  by  accident.la 

Marine  insurance  is  a  contract  of  indemnity  against  loss  occurring 
to  the  subject-matter  of  the  policy  from  certain  perils  of  the  sea  to 
which  the  ship,  merchandise  or  other  interest  may  be  exposed  during 
a  certain  voyage  or  a  certain  period  of  time. 

Guaranty  and  fidelity  insurance  is  insurance  against  loss  arising 
from  want  of  fidelity  in  employes,  insolvency  of  debtors,  negligence  of 
employes  resulting  in  personal  injury  to  others,  and  many  other  simi- 
lar risks.2 

Casualty  insurance  is  insurance  against  loss  resulting  in  bodily  in- 
jury or  the  destruction  of  certain  kinds  of  property.  A  distinction, 
however,  is  generally  made  between  accident  and  casualty  insurance, 
by  which  the  former  is  applied  to  injuries  to  the  body  caused  by  ac- 
cident, and  the  latter  to  accidental  injuries  to  property,  such  as  boilers 
and  plate  glass.3 

Endowment  insurance  is  a  contract  to  pay  a  certain  sum  to  the  in- 

]a  Healey  v.  Mutual  Ace.  Ass'n,  133  (1895);    Fidelity,   etc.,   Co.   v.   Gate 

111.  556,  23  Am.  St.  637   (1890).     As  City  Nat.  Bank,  97  Ga.  634,  33  L. 

to  boiler  insurance,  see  Laclede,  etc.,  R.  A.  821    (1896);    Mechanics'   Sav. 

Co.   v.   Hartford,   etc.,   Ins.   Co.,    60  Bank  v.  Guarantee  Co.,  68  Fed.  459. 

Fed.  351,  9  C.  C.  A.  1  (1894).  Insurance  of  employer  from  liabil- 

2  People    v.    Rose,    174    111.    310,  ity  for  negligence :   See  Anoka  Lum- 

Woodruff  Ins.  Gas.  16  (1898);  State  ber  Co.  v.  Fidelity,  etc.,  Co.,  63  Minn, 

v.    Federal    Inv.    Co.,   48   Minn.    110  286,  30  L.  R.  A.  689   (1895). 

(1892).     Insurance  of  fidelity  of  em-  "Employers',  etc.,  Corp.  v.  Merrill, 

ploye:   See  Fidelity,  etc.,  Co.  v.  Bick-  155  Mass.  404,  Woodruff  Ins.  Cas.  15 

hoff,  63  Minn.  170,  30  L.  R.  A.  586  (1892). 


§    8  THE   CONTRACT   OF   INSURANCE.  16 

sured  if  he  lives  a  certain  length  of  time,  or,  if  he  dies  before  the  time 
stated,  to  some  person  indicated  in  the  contract.4 

§  8.  Wliat  constitutes  insurance. — The  courts  have  in  recent  years 
had  frequent  occasion  to  determine  whether  certain  corporations  were 
engaged  in  the  business  of  insurance.  Numerous  bonding,  invest- 
ment and  gambling  schemes  have  been  organized  in  such  a  manner  as 
to  try  and  get  the  benefit  of  the  idea  of  insurance  and  yet  escape  the 
restrictions  imposed  for  the  benefit  and  protection  of  the  insured. 
Where  the  articles  of  incorporation  provided  "that  the  general  nature 
of  the  business  to  be  transacted  by  this  corporation  shall  be  to  provide 
the  means  for  profitably  investing  for  certificate-holders  small  sums 
of  money,  to  be  paid  in  monthly  installments  until  the  sum  so  accu- 
mulated shall  reach  a  sufficient  amount  to  redeem  in  the  order  of 
their  issuance  all  outstanding  certificates  of  the  company  in  force," 
the  organization  was  held  not  to  be  an  insurance  company.5  The 
court  said  "neither  the  times  nor  the  amounts  of  payments  by  the 
assured,  nor  the  modes  of  estimating  or  securing  the  payment  of  the 
sum  to  be  paid  by  the  insurance,  are  important  or  controlling  in  de- 
termining whether  a  transaction  is  a  contract  of  insurance,  but  in 
order  to  render  it  such  it  must  contain  the  essential  element  of  indem- 
nity for  loss  in  respect  to  some  specified  subject  from  some  specified 
risks ;  and,  to  constitute  a  contract,  one  of  either  a  life,  endowment  or 
casualty  insurance,  the  payment  of  the  indemnity  must  be  contingent 
either  upon  the  duration  of  human  life  or  the  happening  of  a  casualty 
resulting  in  bodily  injury  to  the  insured/' 

There  are  some  events  against  which  the  policy  of  the  law  will 
not  permit  insurance.  If  the  contract  is  in  restraint  of  trade,  or  if 
it  has  a  tendency  to  discourage  matrimony,  it  can  not  be  enforced. 
Thus,  a  corporation  which  agreed  that  if  a  member  should  pay  an 
initiation  fee  and  certain  annual  dues  for  nine  years  and  until  he  was 
married,  and  also  an  assessment  upon  the  marriage  of  any  member, 

*As   to   plans  of   endowment   in-  Fed.  194   (1895);   Stensgaard  v.  St. 

surance,  see  Fuller  v.  Metropolitan  Paul,   etc.,   Ins.   Co.,   50   Minn.   429, 

L.  Ins.  Co.,  37  Fed.  163  (1889).     As  17  L.  R.  A.  575   (1892). 
to  tontine  insurance,  see  Pierce  v.        6  State    v.    Federal    Inv.    Co.,    48 

Equitable   Ass.   Soc.,   145   Mass.   56  Minn.  110  (1892).     Benevolent  asso- 

(1887);    Uhlman   v.   New    York   L.  ciation  not  for  profit,  not  an  insur- 

Ins.  Co.,  109  N.  Y.  421   (1888).    As  ance  company:     See  Northwestern, 

to    title   insurance,    see     Minnesota  etc.,  Ass'n  v.  Jones,  154  Pa.  St.  99 

Title  Ins.  &  T.  Co.  v.  Drexel,   70  (1893). 


17  DEFINITION,,    NATURE,    AND    MANNER   OF    MAKING.  §    8 

and  agreed  not  to  marry  within  two  years,  it  would  pay  $1,000  to  his 
wife  out  of  a  fund  to  be  collected  by  assessment  upon  the  members,  is 
not  an  insurance  company.6 

In  North  Dakota  it  was  recently  held  that  a  corporation  which 
contracted  to  guarantee  a  fixed  revenue  per  acre  for  farming  lands, 
and  as  a  means  of  doing  so  agreed  to  pay  a  stipulated  sum  per  acre 
for  the  crop  grown  upon  the  land,  irrespective  of  its  value,  was  an  in- 
surance company  within  the  meaning  of  the  statute  regulating  for- 
eign insurance  companies.  The  contract  was  said  to  exactly  meet 
the  requirements  of  an  insurance  contract.7  So,  a  contract  which 
binds  a  company,  in  consideration  of  a  sum  paid,  to  purchase  at  a 
fixed  price  the  accounts  which  during  one  year  a  certain  business  firm 
should  have  against  certain  ascertained  insolvent  debtors,  or  judg- 
ment debtors  against  whom  execution  should  be  returned  unsatisfied, 
is  an  insurance  contract.8 

In  reference  to  this  contract,  the  Wisconsin  court  said:9  "We 
regard  the  contract  before  us  as  unquestionably  a  contract  of  insur- 
ance. An  insurance  contract  is  a  contract  whereby  one  party  agrees 
to  wholly  or  partially  indemnify  another  for  the  loss  or  damage  from 
a  specified  peril.  The  peril  of  loss  by  insolvency  of  customers  is  just 
as  definite  and  real  a  peril  to  a  merchant  or  manufacturer  as  the  peril 
or  loss  by  accident,  fire,  lightning  or  tornado,  and  is  in  fact  much 
more  frequent.  No  reason  is  perceived  why  a  contract  of  indemnity 
against  this  ever-present  peril  is  not  as  legitimate  a  contract  of  in- 
surance as  a  contract  which  indemnifies  against  the  more  familiar 
but  less  frequent  peril  of  fire." 

Guaranteeing  the  fidelity  of  officers  and  the  performance  of  con- 
tracts is  insurance  within  the  meaning  of  a  statute  excepting  the 
business  of  insurance  from  those  for  which  corporations  may  be 

c  State     v.     Towle,     80     Me.     287  tern   Co.,   92   Wis.   366,   32   L.  R.   A. 

(1888).     Contracts   in   restraint    of  383    (1896).     See  also  Robertson  v. 

marriage   are   void:     See  White   v.  U.  S.  Credit  System  Co.,  57  N.  J.  L. 

Equitable,  etc.,   Union,   76  Ala.  251  12,  23  Ins.  L.  J.  717   (1894);    Smith 

(1884);  Chalfant  v.  Payton,  91  Ind.  v.  National  Credit  Ins.  Co.,  65  Minn. 

202   (1883).  283,  33  L.  R.  A.  511   (1896);   People 

'State  v.  Hogan,  8  N.  D.  301,  45  v.  Fidelity,  etc.,  Co.,  153  111.  25,  26 

L.  R.  A.  166  (1899).  L.    R.    A.    295     (1894);     Mercantile 

"Claflin   v.   U.    S.    Credit   System  Credit  Guarantee   Co.   v.   Wood,   68 

Co.,   165    Mass.   501    (1896)    (under  Fed.  529,  25  U.  S.  App.  381   (1895); 

Mass.  St.  1887,  ch.  214).  Tebbets  v.  Mercantile  Credit  G.  Co., 

"Shakman   v.    U.    S.    Credit    Sys-  73  Fed.  95  (1896). 
2 — ELLIOTT  INS. 


§    9  THE    CONTRACT   OF    INSURANCE.  18 

formed.10  An  incorporated  association  for  the  purpose  of  obtaining 
employment  for  the  members  while  living,  and  to  render  pecuniary 
assistance  to  the  families  of  deceased  members  through  assessments 
upon  the  survivors,  is  an  insurance  company  within  the  Minnesota 
statute.11 

So  a  contract  guaranteeing  a  party  against  the  loss  of  a  sum  of 
money  deposited  in  a  bank  is  a  contract  of  insurance.12  But  the  in- 
spection and  certification  of  the  sanitary  condition  of  buildings  is  not 
insurance  under  the  Xew  York  statute.13 


§  9.  Reinsurance.  —  An  insurer  who  has  assumed  risks  which  he 
does  not  care  to  carry  may  contract  with  another  person  to  relieve  him 
froin  such  liability  and  assume  it  himself.  Arnould  says  that  "Ee- 
insurance  is  a  contract  of  insurance  by  which  the  original  insurer 
becomes  himself  assured  in  respect  of  the  same  subject  upon  the  same 
risk  and  under  the  same  conditions  as  are  expressed  in  the  original 
policy."14  Thus  A,  who  has  insured  B,  enters  into  a  contract  with  C, 
whereby  the  latter,  for  a  consideration  agreed  upon,  insures  A  from 
loss  by  reason  of  his  contract  with  B.  Such  contracts  were  at  one 
time  prohibited  in  England,  but  are  now  valid  everywhere.15  As 
the  contract  is  one  of  indemnity,  the  reinsurance  may  be  for  an  equal 
or  less  amount  than  the  original,  but  can  not  be  for  more.16  Diffi- 
culties arise  when  the  original  insurer  becomes  insolvent,  is  unable 
to  pay  the  liability  in  full,  or  settles  for  a  sum  less  than  its  liability. 
It  is  the  reinsured,  A,  who  is  to  be  indemnified,  and  it  would  seem 
that  where  A  settles  a  liability  of  $5,000  for  $500,  he  should  be  al- 
lowed to  recover  but  $500  from  C.  This  seems  to  be  the  correct  rule,17 

10  People  v.  Rose,  174  111.  310,  44  Mar.  329;  1  Phillips  Ins.,  ch.  3,  §  13. 
L.  R.  A.  124  (1898).  See  §  340,  infra. 

11  Brown  v.  Balfour,  46  Minn.  68,  15  See  note  to  Barnes  v.  Hekla  F. 
12  L.  R.  A.  373   (1891).  Ins.  Co.,  56  Minn.  38,  in  45  Am.  St. 

"Dane  v.  Mortgage  Ins.  Corp.,  L.  442. 

R.   (1894)  1  Q.  B.  54.  "Philadelphia   Ins.   Co.   v.   Wash- 

13  People  v.  Rosendale,   142  N.  Y.  ington    Ins.    Co.,    23    Pa.    St.     250 

126,  36  N.  E.  806,  rev.  25  N.  Y.  Supp.  (1854);    Illinois,    etc.,    Ins.     Co.    v. 

769  (1894)   (under  N.  Y.  Laws  1892,  Andes  Ins.  Co.,  67  111.  362    (1873); 

ch.  690,  §  70).  Imperial  Fire  Ins.  Co.  v.  Home  Ins. 

"1   Arnould   Mar.   Ins.    (Maclach-  Co.,    68    Fed.    698,   15    C.   C.   A.    609 

lan's  ed.,  1887)  103;  Emerigon  Ins.,  (1895). 

ch.   8,   §   14;    Boulay-Paty,   3   Droit-  1T  Illinois  Mut.  F.  Ins.  Co.  v.  Andes 

Ins.  Co.,  67  111.  362  (1873). 


19  DEFINITION,    NATURE,    AND    MANNER    OF    MAKING.  §    10 

but  where  A  was  insolvent,  and  had  made  no  settlement  with  B,  A's 
receiver  recovered  the  full  amount  of  A's  liability  from  C.18 

The  reinsurance  creates  no  contractual  relation  between  the  re- 
insurer and  the  original  insured.  Emerigon  says:19  "The  original 
contract  subsists  precisely  as  it  was  made  without  renewal  or  altera- 
tion. The  reinsurance  is  absolutely  foreign  to  the  first  insured,  with 
whom  the  reinsurer  contracts  no  sort  of  obligation.  The  risks  which 
the  reinsurer  has  assumed  constitute  between  him  and  the  insurer  a 
contract  of  reinsurance  which  is  a  new  contract  totally  distinct  from 
the  first."  The  original  insured  has,  therefore,  no  claim  against  the 
reinsurer/  although  his  insurer  has  become  insolvent.20 

The  reinsured  recovers  upon  the  same  evidence  as  would  have  been 
produced  against  himself  by  the  original  insured,21  and  the  reinsurer 
is  entitled  to  the  defenses  which  the  original  insurer  could  have  as- 
serted against  the  first  insured.22 

The  contract  of  reinsurance  must  apply  to  the  subject-matter  of  the 
original  insurance  and  to  risks  of  the  kind  specified  in  the  original 
policy,  although  the  specific  risks  need  not  be  identical.23  A  con- 
tract of  reinsurance  of  such  marine  risks  may  cover  such  risks  as  the 
insured  had  when  it  is  made  or  may  have  during  the  risk.  The  pol- 
icy will  attach  when  the  interest  is  acquired.233- 

§  10.  Parties. — The  parties  to  a  contract  of  insurance  are  known 
as  the  insured  and  the  insurer.  As  insurance  is  generally  transacted 
by  corporations,  the  insurer  is  commonly  referred  to  as  the  company. 
The  relation  between  the  parties  is  one  of  contract  merely,  and  their 
rights  are  measured  by  the  terms  of  the  written  contract  called  the 
policy.24  The  parties  must  be  legally  competent  to  make  a  legal  and 
binding  contract. 

"Cashau    v.    Northwestern,    etc.,  21  3  Kent's  Com.  (13th  ed.),  §  279, 

Ins.    Co.,    5    Biss.    476    (1873);     Ex  p.  402. 

parte  Norwood,  3  Biss.  504   (1873);  "See  Gledstanes  v.  Royal  Bxch., 

Hunt   v.    New    Hampshire   F.,   etc.,  etc.,   Corp.,   34   L.    J.     (Q.    B.)     30 

Ass'n,  68  N.  H.  305,  38  Atl.  145,  38  (1864). 

L.  R.  A.  514  (1895).     See  1  May  Ins.  23  See    discussion    in    Imperial    P. 

(3d  ed.),  §  lla.  Ins.  Co.  v.  Home  Ins.  Co.,  68  Fed. 

"Emerigon  Ins.   (Meredith's  ed.),  698,  15  C.  C.  A.  609  (1895). 

ch.  8,  §  14.  23a  Boston  Ins.  Co.  v.  Globe  F.  Ins. 

20Alauzet    Traite    des    Assurance  Co.,  174  Mass.  229,  75  Am.  St.  303 

152.     But  see  cases  cited  at  §  340,  (1899). 

infra.  2iUhlman  v.  N.  Y.  Life  Ins.  Co., 

109  N.  Y.  421,  4  Am.  St.  482  (1888). 


§    11  THE    CONTRACT    OF   INSURANCE.  20 

§  11.  The  insured. — A  person  who  is  under  any  legal  disability 
can  not  make  a  valid  contract  of  insurance.  Insurance  against  loss 
by  fire  is  not  a  contract  for  necessities  for  which  an  infant  may  be 
held.25  Such  a  contract  is  merely  voidable  at  the  option  of  the  infant 
and  is  binding  upon  the  company.26  There  is  a  conflict  as  to  the 
right  of  a  mutual  insurance  company  to  insure  the  life  of  an  infant.  It 
is  said  that  it  can  not  be  done,  as  there  could  not  be  the  mutuality  of 
obligation  which  is  at  the  foundation  of  every  contract,27  but  the 
answer  is  that  where  there  is  no  legal  obligation  to  pay  the  dues,  and 
a  failure  to  do  so  merely  results  in  loss  of  membership,  the  contract 
imposes  no  obligation  upon  the  infant  which  he  is  not  legally  com- 
petent to  perform.28  The  courts  recognize  the  right  of  an  infant  to 
repudiate  a  contract  of  life  insurance,  but  where  it  is  manifestly  for 
the  benefit  of  the  infant  he  is  allowed  to  recover  only  the  unearned 
portion  of  the  premium  which  he  has  paid  where  an  attempt  was  made 
to  recover  the  entire  amount  of  the  premiums  paid.  The  court  said  :29 
"Life  insurance  in  a  solvent  company  at  the  ordinary  and  usual  rates, 
for  an  amount  reasonably  commensurate  with  the  infant's  estate  and 
his  financial  ability  to  carry  it,  is  a  provident,  fair  and  reasonable 
contract,  and  one  which  it  is  entirely  proper  for  the  insurance  com- 
pany to  make  with  him,  assuming  that  it  practiced  no  fraud  or  other 
unlawful  means  to  secure  it;  and  if  such  should  prove. to  be  the  char- 
acter of  this  contract,  the  plaintiff  could  not  recover  the  premiums 
which  he  has  paid  in  so  far  as  they  were  intended  to  cover  the  current 
annual  risk  assumed  by  the  company  under  the  policy/' 

An  alien  friend  may  make  a  valid  contract  of  insurance,  although 
an  alien  enemy,  that  is,  a  citizen  of  the  country  with  whom  the 
nation  of  the  first  party  is  at  war,  has  no  such  capacity.30 

28  New  Hampshire  Mut.  F.  Ins.  Co.  by  injunction:    See  In  re  Globe  Mut. 

v.  Noyes,  32  N.  H.  345    (1855).     In  Ben.  Ass'n,  135  N.  Y.  280,  17  L.  R. 

Colorado  it  is  a  criminal  offense  to  A.  547    (1892). 

insure  the  life  of  a  child  under  the  28  Chicago  Mut.  Life,  etc.,  Ass'n  v. 

age    of   ten    years:     Laws    1893,    p.  Hunt,      127      111.      257      (1889).     In 

118.  Michigan  an  infant  member  of  a  so- 

""Monaghan    v.    Agricultural    F.  ciety  is  made  liable  by  statute  for 

Ins.  Co.,  53  Mich.  238  (1884).  the  payment  of  fees,  and  otherwise 

27  In  re  Globe  Mut.  Ben.  Ass'n,  63  as  if  he  were  of  full  age:    Howell 

Hun    (N.    Y.)    263,    135    N.    Y.    280,  Stat.,   §  7560. 

Woodruff  Ins.  Cas.  28   (1892).     The  29  Johnson   v.    Northwestern   Mut. 

receiving  of  an  infant  as  a  member  Life  Ins.  Co.,  56  Minn.  365,  59  N.  W. 

of  a  co-operative  or  assessment  in-  992,  Woodruff  Ins.  Cas.  22  (1894). 

surance  company  may  be  prevented  M  Clarke  v.  Morey,  10  Johns.   (N. 


21  DEFINITION,    NATURE,    AND    MANNER    OF    MAKING.  §    12 

Where  a  loss  occurs  after  the  death  of  the  party  insured,,  and  be- 
fore the  appointment  of  an  administrator,  "the  insured,"  for  the  pur- 
pose of  giving  notice  and  making  proofs  of  loss,  must  be  either  the 
person  who,  in  the  course  of  time,  will  be  appointed  to  administer  the 
estate,  or  the  persons  interested  in  the  estate  who  expect  to  benefit  by 
the  insurance.  The  former  not  being  in  existence,  it  is  the  duty  of 
the  latter  to  make  all  reasonable  efforts  to  see  that  the  covenants  of 
the  policy  are  complied  with,  and  to  use  such  agencies  as  the  law  pro- 
vides to  secure  such  results.31 

§  12.  The  insurer — Foreign  corporations — State  control. — Orig- 
inally all  insurance  contracts  were  made  by  individuals,  but  in  modern 
times  the  business  is  conducted  almost  entirely  by  corporations  organ- 
ized under  laws  which  provide  for  their  creation  and  control.  The 
business  of  insurance  is  not  commerce,  and  he.nce  is  under  the  control 
of  the  states  and  not  of  the  general  government.32 

A  full  consideration  of  these  statutes  does  not  fall  within  the  scope 
of  this  work,  and  it  is  sufficient  to  say  that  all  the  states  have  laws 
which  authorize  the  creation  of  corporations  which,  upon  complying 
with  the  prescribed  conditions,  may  make  contracts  of  insurance 
against  the  various  risks  and  dangers  to  which  life  and  property  are 
subject. 

The  state  has  full  control  over  the  business  of  insurance.  It  may 
permit  it  to  be  carried  on  by  corporations  only,33  and  it  may  prescribe 
the  conditions  upon  which  domestic  or  foreign  corporations  may  en- 
gage in  the  business.3*  Foreign  corporations  may  be  entirely  ex- 
cluded from  the  state35  or  admitted  upon  such  terms  as  are  judged 
proper  for  the  protection  of  the  policy-holders  within  the  state.  These 

Y.)  69   (1813).     See  note  to  96  Am.  34  As  to  the  power  to  regulate  and 

Dec.    624-630.     A    license    to    trade  control    the    business    of    insurance 

may  be  granted  to  such  alien:    Me-  companies  already  created,  see  Chi- 

Stea    v.   Matthews,   50    N.    Y.    166  cago  L.  Ins.  Co.  v.  Needles,  113  U.  S. 

(1872).  574   (1885);   State  v.  Eagle  Ins.  Co., 

81  Matthews     v.     American     Cent.  50    Ohio    St.    252,     33    N.    E.     1056 

Ins.  Co.,  154  N.  Y.  449,  39  L.  R.  A.  (1893);  State  v.  Ackerman,  51  Ohio 

433   (1897).  fat.  163,  24  L.  R.  A.  298   (1894),  an- 

32  Paul   v.    Virginia,    8    Wall.    (U.  notated. 

S.)   168    (1868);    Hooper  v.  Califor-  »  Daggs  v.  Orient  Ins.  Co.,  136  Mo. 

nia,  155  U.  S.  648  (1895).  382,  58  Am.  St.  638   (1896);    Orient 

33  Com.   v.   Vrooman,    164   Pa.    St.  Ins.   Co.  v.   Daggs,   172    U.    S.    557 
306,  25  L.  R.  A.  250   (1894).  (1899). 


13 


THE    CONTRACT   OF    INSURANCE. 


22 


conditions  may  extend  to  the  form  and  legal  effect  of  the  company's 
policy  as  well  as  to  the  general  manner  of  the  transaction  of  its  busi- 
ness.30 The  conditions  may  be  reasonable  or  unreasonable,  as  they 
are  entirely  within  the  control  of  the  legislative  department  of  the 
state.37 

Where  the  business  is  confined  to  corporations,  the  prohibitions  ex- 
tend to  citizens  of  other  states  as  well  as  the  home  state.  The  busi- 
ness may  be  subjected  to  regulation,  but  when  it  is  transacted  by  in- 
dividuals there  can  be  no  discrimination  between  citizens  of  equal 
standing  and  merit.38  By  the  weight  of  authority,  the  failure  to  com- 
ply with  the  conditions  imposed  by  the  state  can  not  be  shown  as  a  de- 
fense to  an  action  on  a  policy  issued  by  the  company  which  has  not 
complied  with  the  law.39 

§  13.  Mutual  companies  and  benevolent  societies. — The  original 
insurance  companies  were  joint  stock  corporations,  but  in  recent  years 
many  have  been  organized  upon  the  mutual  plan.  Such  companies  are 
regulated  by  special  statutes,  but  for  certain  purposes  all  are  treated 
as  insurance  companies.  In  some  states  mutual  companies  do  not 


30  Berry  v.  Knights,  etc.,  Indem- 
nity Co.,  46  Fed.  439  (1891).  See 
Com.  v.  Nutting,  175  Mass.  154,  78 
Am.  St.  483  (1900);  State  v.  Fricke, 
102  Wis.  107,  77  N.  W.  732,  78  N.  W. 
455  (1898). 

37  Hartford  Fire  Ins.  Co.  v.  Com'r 
of  Ins.,  70  Mich.  485   (1888).     As  to 
the  retaliatory  statutes  in  force  in 
many  of  the  states,  see  Elliott  Priv. 
Corp.    (3d   ed.),    §    249;    People    v. 
Fidelity,    etc.,    Co.,    153    111.    25,    26 
L.  R.  A.  295  (1894). 

38  State  v.  Stone,  118  Mo.  388,  25 
L.   R.    A.    243    (1893);     Hoadley   v. 
Purifoy,  107  Ala.  276,  30  L.  R.  A. 
351    (1895).     See   further  as  to   re- 
strictions  upon   a   business    of    in- 
dividuals   or    unincorporated    asso- 
ciations from  another  state:    Com. 
v.  Vrooman,  164  Pa.  St.  306,  25  L. 
R.  A.  250  (1894);  Com.  v.  Reinoehl, 
163    Pa.    St.    287,    25   L.    R.   A.    247 
(1894),  and  note  in  25  L.  R.'A.  238. 


38  Ganser  v.  Fireman's  Fund  Ins. 
Co.,  34  Minn.  372  (1885);  Phenix 
Ins.  Co.  v.  Pennsylvania  R.  Co.,  134 
Ind.  215,  20  L.  R.  A.  405  (1893),  an- 
notated. As  to  the  right  of  a  citi- 
zen of  one  state  to  make  a  contract 
of  insurance  outside  of  the  state 
with  a  company  which  is  hot  au- 
thorized to  do  business  within  the 
state,  see  Allgeyer  v.  Louisiana,  165 
U.  S.  578  (1897).  As  to  the  en- 
forcement of  contracts  made  by 
companies  not  authorized  to  trans- 
act business  in  a  state,  see  Elliott 
Priv.  Corp.  (3d  ed.),  §  268;  State 
Mut.  F.  Ins.  Co.  v.  Brinkley,  etc., 
Co.,  61  Ark.  1,  29  L.  R.  A.  712 
(1895);  Pennypacker  v.  Capital  Ins. 
Co.,  80  Iowa  56,  8  L.  R.  A.  236  (1890). 
Contract  made  by  mail  by  such  a 
company:  Rose  v.  Kimberly,  etc., 
Co.,  89  Wis.  545,  27  L.  R.  A.  556 
(1895);  Seamans  v.  Temple  Co., 
105  Mich.  400,  28  L.  R.  A.  430  (1895). 


23  DEFINITION,    NATURE,    AND    MANNER   OF    MAKING.  §    13 

come  under  the  statutes,  which  are  intended  for  the  general  regulation 
of  insurance  companies. 

Another  form  of  organization  is  known  as  the  mutual  benevolent 
associations.  Certain  privileges  and  exemptions  are  granted  to  these 
organizations,  which,  although  in  one  sense  insurance  companies,  are 
supposed  to  be  so  saturated  with  the  spirit  of  benevolence  and  phi- 
lanthropy as  to  make  them  the  favorites  of  the  law,  and  to  justify  their 
exemption  from  the  strict  provisions  of  the  law  governing  insurance 
corporations.  In  some  instances  persons  have  chosen  this  statutory 
livery  of  benevolence  to  serve  themselves  in,  with  the  usual  result. 
It  requires  close  scrutiny  to  discover  any  element  of  benevolence  in 
the  contracts  issued  by  many  of  these  institutions.  Of  one  such  the 
court  said:40  "It  is  apparent  from  an  examination  of  the  charter 
and  its  method  of  doing  business  that  it  is  a  mutual  life  insurance 
company  on  the  assessment  plan.  Its  business  is  insurance  and  noth- 
ing else.  There  is  not  a  social,  charitable  or  benevolent  feature  in  its 
organization  or  the  conduct  of  its  business.  It  has  no  lodges,  pays 
no  sick  dues,  distributes  no  aid,  and  gives  no  attention  to  members 
in  distress  or  poverty.  It  deals  with  its  members  on  the  strictest  busi- 
ness principles.  The  policy-holders  get  nothing  for  which  full  value 
has  not  been  paid  by  the  assured,  but  the  assured  may  pay  much  and 
the  policy-holder  recover  nothing  by  reason  of  the  forfeiture  of  the 
policy  for  a  violation  of  some  one  of  its  numerous  conditions." 

It  is  sometimes  a  question  whether  such  organizations  are  engaged 
in  the  insurance  business  within  the  meaning  of  the  law,  and  if  so 
whether  they  should  be  required  to  comply  with  the  statutory  condi- 
tions imposed  upon  insurance  companies.  When  they  are  properly 
organized  for  benevolent  and  protective  purposes  under  special  stat- 
utes, they  are  not  governed  by  the  general  laws  regulating  the  busi- 
ness of  insurance.41  It  is  generally  held  that  certificates  of  such 
associations  do  not  constitute  "other  insurance"  within  the  meaning 
of  the  question  in  the  application.42 

40  Berry  v.  Knights,  etc.,  Indem-  (1889);  Commercial  League  Ass'n 
nity  Co.,  46  Fed.  439  (1891).  See  v.  People,  90  111.  166  (1878);  State 
also  National  Union  v.  Marlow,  74  v.  Bankers',  etc.,  Ass'n,  23  Kan.  499 
Fed.  775,  21  C.  C.  A.  89  (1896),  and  (1880).  See  National  Union  v.  Mar- 
cases  there  cited.  low,  74  Fed.  775,  21  C.  C.  A.  89 

"Com.    v.    Equitable    Ben.    Ass'n,  (1896)    (under   Mo.   Stat.   1889,   ch. 

137  Pa.  St.  412,  18  Atl.  1112  (1890);  42,  art.  10). 

State    v.    Whitmore,     75     Wis.     332  42  See    Penn    Mut.    L.    Ins.    Co.    v. 


§    14  THE    CONTRACT    OF    INSURANCE.  24 

These  matters  are  now  generally  regulated  by  statute.  In  Iowa  it 
was  held  that  where  the  main  purpose  is  that  of  life  insurance,  or  in- 
surance against  sickness  and  disability,  the  company  is  amenable  to 
the  laws  of  the  state  relating  to  insurance  corporations,  and  must, 
therefore,  comply  with  the  statutory  requirements  relating  to  insur- 
ance companies  organized  in  other  states.44  In  Michigan  it  was  said 
that  as  an  insurance  contract  is  an  agreement  by  which  one  party, 
for  a  consideration,  promises  to  make  a  certain  payment  of  money 
upon  the  destruction  or  injury  of  something  in  which  the  other  party 
has  an  interest,  all  mutual  benefit  and  co-operative  associations  or 
mere  voluntary  associations  are,  strictly  speaking,  insurance  organ- 
izations, whenever,  in  consideration  of  periodical  contributions,  they 
engage  to  pay  the  member  or  his  designated  beneficiary  a  benefit  upon 
the  happening  of  a  specified  contingency.45 

An  association  organized  for  benevolent  purposes,  under  the  super- 
vision of  a  supreme  body,  which  secured  its  members  by  the  lodge 
system,  on  application  and  after  a  satisfactory  medical  examination, 
required  an  initiation  fee  and  assessments,  and  which,  in  the  case 
of  accidental  disability,  paid  a  weekly  amount,  and  upon  the  death  of 
a  member,  to  be  shown  by  proper  proof,  returned  the  amount  of  the 
assessment  paid,  less  benefits  received,  was  held  not  a  life  insurance 
company  within  the  meaning  of  the  statutes  requiring  such  com- 
panies doing  business  in  the  state  to  make  a  deposit  with  the  state 
treasurer.46 

A  corporation  organized  "to  give  financial  aid  and  benefit  to  the 
widows,  orphans  and  heirs  or  devisees  of  deceased  members/'  and  de- 
clared by  statute  not  to  be  an  insurance  corporation,  can  not  contract 
for  endowment  insurance  payable  to  a  member  when  he  reaches  a 
certain  age.47 

§  14.  The  risk. — It  is  essential  to  every  contract  of  insurance  that 
there  should  be  a  risk  to  which  the  subject-matter  is,  or  may  be,  sub- 
jected, and  this  risk  should  be  a  real  one,  which  neither  the  insured 
nor  the  company  has  power  to  avert  or  hasten.  "It  is  of  the  very  es- 

Mechanics',  etc.,  Co.,  43  U.  S.  App.  "  Rensenhouse  v.  Seeley,  72  Mich. 

75,  38  L.  R.  A.  33  (1896),  annotated.  603  (1888). 

"State   v.    Nichols,    78    Iowa    747  4r  Rockhold  v.   Canton   Mas.   Mut. 

(1888).  B.  Ass'n,  129  111.  440,  2  L.  R.  A.  420 

45  Rensenhouse  v.  Seeley,  72  Mich.  (1889). 
603,  40  N.  W.  765  (1888). 


25  DEFINITION,    NATURE,    AND    MANNER    OF    MAKING.  §    14 

sence  of  insurance  and  forms  the  principal  foundation  of  the  con- 
tract *  *  the  insurer  takes  upon  himself  the  peril  which  the 
property  or  interest  of  others  is  liable  to  encounter.  The  very  life  of 
the  contract  involves  the  presumption  that  the  thing  is  or  will  be 
exposed  to  some  danger."48 

As  already  stated,  the  risks  which  may  be  insured  against  are  too 
numerous  to  be  named.  Any  contingent  or  unknown  event,  whether 
past  or  future,  which  may  damnify  a  person  having  an  insurable 
interest  or  create  a  liability  against  him,  may  be  insured  against. 
Whatever  has  an  appreciable  pecuniary  value  and  is  subject  to  loss  or 
deterioration,  or  of  which  one  may  be  deprived,  or  that  he  may  fail  to 
realize,  whereby  his  pecuniary  interest  is  or  may  be  prejudiced,  may 
properly  constitute  the  subject-matter  of  insurance.  This  rule,  how- 
ever, is  subject  to  the  limitation  that  whatever  the  law  discourages  or 
disapproves  of,  whether  by  special  statute  or  on  the  general  principles 
enforced  by  the  common  law  in  the  interest  of  good  morals  and  good 
order  and  general  public  policy,  will  not  be  encouraged  by  insurance.49 

The  contract  attaches  to  the  interest  and  not  to  the  property.  This 
interest  must  be  in  a  kind  of  property  which  the  law  permits  a  person 
to  own  or  in  a  business  enterprise  which  is  lawful  and  consistent  with 
the  policy  of  the  law.  Thus,  a  valid  contract  can  not  be  made  for  the 
protection  of  an  interest  in  a  lottery  or  other  gambling  enterprise,  as  a 
contract  insuring  an  illegal  business  is  void.  Thus,  a  contract  insur- 
ing a  person  engaged  in  selling  liquor  against  the  danger  of  a  fine  or  a 
forfeiture  of  a  license  is  invalid.  But  the  general  rule  is  that  an  in- 
terest in  property  which  the  law  permits  a  party  to  own  and  use  under 
certain  restrictions,  although  the  property  is  in  fact  being  illegally 
used,  may  be  insured.  A  contract  of  insurance  against  a  stock  of 
liquors  illegally  kept  for  sale  is  generally  held  valid.  It  was  said  in 
Michigan  :50  "By  insuring  his  property  the  insurance  company  had  no 
concern  with  the  use  which  he  made  of  it,  and  as  it  is  susceptible  of 
lawful  use,  no  one  can  be  held  to  contract  concerning  it  in  an  illegal 
manner,  unless  the  contract  itself  is  for  a  directly  illegal  purpose. 

48 1  Joyce  Ins.,  §  16.  Co.,   98   Iowa  606,   40  L.   R.  A.   845 
48 1  May  Ins.,  §  71;    1  Duer  Ins.,  (1898),  annotated;   Carrigan  v.  Ly- 
§   3.     See  Phenix  Ins.  Co.  v.   Clay,  coming  F.  Ins.   Co.,  53  Vt.  418,  38 
101  Ga.  331,  65  Am.  St.  307   (1897).  Am.    Rep.    687    (1881).     In     Massa- 
50  Niagara  F.  Ins.  Co.  v.  DeGraff,  chusetts  an  insurance  upon  liquors 
12  Mich.  124    (1863);    People's  Ins.  illegally  kept  for  sale  is  void:    Law- 
Co,    v.    Spencer,    53    Pa.    St.     353  rence  v.   National   F.   Ins.   Co.,   127 
(1866);    Erb  v.   German-Amer.   Ins.  Mass.   557    (1880);    but  sales   made 


§    15  THE    CONTRACT    OF   INSURANCE.  26 

Collateral  contracts  in  which  no  illegal  design  enters  are  not  affected 
by  an  illegal  transaction  with  which  they  may  be  remotely  connected." 
It  was  recently  held  that  an  English  company  could  legally  insure 
the  property  of  a  foreigner  from  capture  by  the  government  of  the 
insurer  in  contemplation  of  war  between  the  countries  of  the  insurer 
and  the  insured.50* 

§  15.  A  personal  contract. — The  contract  of  insurance  has  certain 
characteristic  features  to  which  attention  should  be  called.  Thus,  it 
is  personal,  and  does  not,  unless  expressly  so  provided,  run  with  the 
property.  It  protects  the  person  and  not  the  thing  in  which  he  is 
interested.  It  does  not  pass  with  the  title  of  the  property,51  but  in 
this  respect  a  distinction  must  be  noted  between  a  contract  of  insur- 
ance and  a  covenant  to  insure  made  between  parties  relative  to  land.52 
In  Sadler's  Case™  Lord  Hardwicke  said:  "To  whom,  or  for  what 
loss  are  they  to  make  satisfaction?  Why,  to  the  person  insured  and 
for  the  loss  he  may  have  sustained,  but  it  can  not  properly  be  called 
insuring  the  thing,  for  there  is  no  possibility  of  it,  and,  therefore, 
must  mean  insuring  the  person  from  damage."  In  another  early 
case54  it  was  said:  "These  policies  are  no  insurance  on  the  specific 
things  mentioned  to  be  insured,  nor  do  such  insurances  attach  to  the 
realty  or  in  any  manner  go  with  the  same  as  incident  thereto  by  any 
conveyance  or  assignment,  but  they  are  only  special  agreements  with 
the  person  insuring  against  such  loss  or  damage  as  they  may  sustain. 
The  party  insured  must  have  the  property  at  the  time  of  the  loss,  or 
he  can  sustain  no  loss,  and  consequently  can  be  entitled  to  no  satis- 
faction." 

§  16.  A  conditional  contract. — The  contract  is  also  conditional. 
Thus,  it  does  not  become  binding  until  the  subject-matter  is  subjected 
to  the  perils  insured  against.  The  risks  "are  the  occasion  of  the  con- 
tract being  made,  and  without  exposure  to  them  it  never  applies.''55 

during  a  brief  period  of  expiration  ters    (U.    S.)    495     (1842);    Lett    v. 

of  license  will  not  invalidate  a  pol-  Guardian  F.  Ins.  Co.,  125  N.  Y.  82 

icy:    Hinckley  v.  Germania  F.  Ins.  (1890);  McDonald  v.  Black,  20  Ohio 

Co.,  140  Mass.  38    (1885).  185,  55  Am.  Dec.  449  (1851). 

^a  Driefontein,  etc.,  Mines  v.  Jan-  M  Thomas  v.  Vankapff,  6  Gill  &  J. 

sen,  L.  R.   (1901)  2  K.  B.  419.     The  (Md.)  372  (1834). 

decision   is   a   departure   from   well  M  Sadler  Co.  v.  Badcock,  2  Atk.  554 

settled  principles.  (1743). 

"Quarles    v.    Clayton,     87     Tenn.  "Lynch    v.    Dalzel,    3     Bro.     Cas. 

308    (1889);     Carpenter     v.     Provi-  Parl.  497,  quoted  in  Park.  Ins.  453. 

dence-Washington    Ins.   Co.,    16   Pe-  M 1  Arnould  Mar.  Ins.  16. 


37  DEFINITION,    NATURE,    AND    MANNER    OF    MAKING.  §    17 

"Hence/'  said  Lord  Mansfield,  "where  the  risk  has  not  been  run, 
whether  its  not  being  run  was  owing  to  the  fault,  pleasure  or  will  of 
the  insured,  or  to  any  other  cause,  the  premium  shall  be  returned/' 
Many  other  conditional  provisions  are  found  in  insurance  contracts.56 

§  17.  An  aleatory  contract. — In  an  ordinary  contract  the  thing 
given  or  done  by  one  party  is  considered  as  an  equivalent  of  what  is 
given  or  done  by  the  other,  but  an  element  of  wager  enters  into  every 
insurance  contract.  If  no  loss  occurs,  the  insurer  gains  the  amount  of 
the  premium;  if  loss  occurs,  the  insured  receives  the  amount  of  his 
loss,  which  is  generally  much  greater  than  the  premium.  By  reason 
of  this  element  of  chance  the  contract  is  said  to  be  aleatory. 

§  18.  Indemnity. — The  fundamental  principle  at  the  base  of  every 
contract  of  insurance  affecting  an  interest  in  property  is  that  of  in- 
demnity.57 This  means  that  the  object  of  the  contract  is,  in  the 
event  of  loss,  to  place  the  insured  as  nearly  as  possible  within  the 
terms  and  conditions  of  the  policy,  in  the  same  situation  as  before  the 
loss.  The  value  of  the  interest  may  be  determined  after  the  loss,  or 
by  the  contract. 

A  policy  of  insurance  is  not  a  perfect  contract  of  indemnity,  and 
the  general  statement  must  be  taken  with  this  qualification,  that  the 
parties  may  agree  beforehand  in  estimating  the  value  of  the  subject 
or  of  the  interest  by  way  of  liquidated  damages.58  Where  the  valua- 
tion is  previously  determined  and  inserted  in  the  contract  it  will  be 
taken  as  conclusive  in  the  absence  of  gross  or  fraudulent  overvalua- 
tion. Eeinsurance  is  a  contract  of  indemnity.59 

§  19.  Life  insurance  not  a  contract  of  indemnity. — After  much 
discussion  it  is  now  well  settled  that  life  insurance  is  not  a  contract 
of  indemnity,  but  simply  a  contract  in  consideration  of  a  fixed  pay- 
ment annually  or  otherwise,  as  determined  by  the  contract,  to  pay  a 

56  See  Cooledge  v.  Continental  Ins.  Ass'n,  1887,  p.  261;   Wilson  v.  Hill, 

Co.,  67  Vt.  14  (1894).  3    Met.    (Mass.)    66,    Woodruff    Ins. 

"The  principle  is  so  well  estab-  Gas.  1   (1841). 

lished    as    scarcely    to    require    the  5S  Irving  v.  Manning,  1  H.  L.  Gas. 

citation    of    authorities.     See,    gen-  287   (1847). 

erally,  Castellain  v.  Preston,  L.  R.  °9  Eagle  Ins.  Co.  v.  Lafayette  Ins. 

11  Q.  B.  D.  380;  McDonald  v.  Black,  Co.,  9   Ind.   443    (1857);    Bartlett  v. 

20  Ohio  185,  55  Am.  Dec.  448  (1851).  Fireman's  Fund   Ins.   Co.,   77   Iowa 

See  article  on  "Indemnity  the  Es-  155   (1889). 
sence  of  Insurance,"  Proc.  Am.  Bar 


§    19  THE    CONTRACT   OF   INSURANCE.  28 

greater  sum  upon  the  happening  of  a  future,  certain  event.  It  very 
much  resembles  a  fire  or  marine  valued  policy,  and  the  early  decisions 
treated  it  as  a  contract  of  indemnity  and  held  that  a  creditor  who 
had  insured  the  life  of  his  debtor  could  not  recover  on  the  policy  where 
the  executors  paid  the  debt  after  the  death  of  the  debtor  and  before 
an  action  was  brought  on  the  policy.60  But  this  decision  was  unsatis- 
factory to  the  courts  and  the  business  community,01  and  was  finally 
reversed  in  a  carefully  considered  case,  where  it  was  squarely  decided 
that  a  contract  of  life  insurance  in  no  way  resembled  a  contract  of 
indemnity.02  It  was  said  that  such  a  contract  "really  is  what  it  is  on 
the  face  of  it,  a  contract  to  pay  a  certain  sum  in  the  event  of  death.  It 
is  valid  at  the  common  law,  and  if  it  is  made  by  a  person  having  an 
interest  in  the  duration  of  the  life  it  is  not  prohibited  by  the  statute." 
It  is  unnecessary  to  discuss  the  reasons  which  have  led  most  of  our 
courts  to  accept  the  view  that  life  insurance  is  not  a  contract  of  in- 
demnity, as  the  controversy  is  now  practically  closed  and  the  leading 
decisions  are  cited  in  the  notes.63  The  difficulty  is  in  disposing  of 
cases  where  creditors  insure  the  lives  of  their  debtors  for  the  purpose 
of  securing  the  payment  of  their  debts.  Kespectable  authorities  hold 
with  much  force  and  reason  that  such  contracts  are  for  indemnity 
only,04  and  statements  are  occasionally  found  to  the  effect  that  all 
insurance  contracts  are  contracts  of  indemnity.65 

""Godsall   v.    Boldero,    9    East   72  the      disproportion      between      the 

(1807).  amount   of   the   insurance   and   the 

81  See  Bunyan  Life  Ins.,  §  7.  debt  is  gross,  the  policy  is  void  as 

^Dalby'v.  India,  etc.,  Assur.  Co..  a  wager  policy.     See  Grant  v.  Kline, 

15  C.  B.  365  (1854).  115  Pa.  St.  618  (1887),  and  cases  at 

83  That   life   insurance    is    not    a  section  66,  infra. 

contract  of  indemnity,  see  Dalby  v.  C5  So  eminent  a  jurist  as  Mr.  Jus- 
India,  etc.,  Assur.  Co.,  15  C.  B.  365  tice  Mitchell  recently  said:  "The 
(1854);  Scott  v.  Dickson,  108  Pa.  very  essence  of  any  definition  of  in- 
bt.  6,  56  Am.  Rep.  192  (1884);  Mu-  surance  is  indemnity  for  loss  in  re- 
tual  L.  Ins.  Co.  v.  Allen,  138  Mass,  spect  of  a  specified  subject.  The 
24,  52  Am.  Rep.  246  (1884);  Emer-  contract  of  life  insurance  or  of  in- 
ick  v.  Coakley,  35  Md.  188  (1871);  surance  upon  a  life  in  the  ordinary 
Nye  v.  Grand  Lodge,  9  Ind.  App.  form  is  a  contract  to  pay  a  certain 
131  (1894).  sum  of  money  on  the  death  of  the 

84  Exchange  Bank  v.  Loh,  104  Ga.  insured : "     State  v.  Federal  Inv.  Co., 
446,  44  L.  R.  A.  372   (1898);   Miller  48  Minn.  110.     See  also  Kennedy  v. 
v.   Eagle,   etc.,   Ins.    Co.,    2    E.    D.  New  York  Life  Ins.  Co.,  10  La.  An. 
Smith     (N.     Y.)     294     (1854).      In  809    (1855);     Bevin    v.    Connecticut 
Cooper   v.    Shaeffer    (Pa.),    11    Atl.  Mut.    L.    Ins.    Co.,    23    Conn.    244 
548   (1887),  it  was  held  that  where  (1854);  May  Ins.  (3d  ed.),  §  7. 


29  DEFINITION,    NATURE,    AND    MANNER    OF    MAKING.  §    20 

§  20.  Indemnity  in  accident  insurance. — An  accident  insurance 
policy  is  a  contract  of  indemnity  in  so  far,  at  least,  as  it  protects 
against  personal  injury  resulting  from  accident;  but  it  resembles  an 
ordinary  life  insurance  contract  in  so  far  as  it  provides  for  the  pay- 
ment to  another  person  of  a  fixed  sum  in  case  of  death  by  accident. 
Death  covered  by  an  ordinary  life  policy  is  certain  to  occur,  but  death 
by  accident  is  no  more  liable  to  occur  than  loss  by  fire  under  a  fire 
insurance  contract.  In  Illinois  it  was  recently  said  that  "a  policy 
of  accident  insurance  is  issued  and  accepted  for  the  purpose  of  fur- 
nishing indemnity  against  accidents,  or  death  caused  by  accidental 
means."66 

§  21.  Subrogation. — As  a  result  of  the  principle  of  indemnity,  the 
doctrine  of  subrogation  applies  to  a  fire  or  marine  insurance  contract. 
"In  fire  insurance  as  well  as  in  marine  insurance,"  says  Mr.  Justice 
Gray,07  "the  insurer,  upon  paying  to  the  assured  the  amount  of  a  loss 
on  the  property  insured,  is  doubtless  subrogated  in  a  corresponding 
amount  to  the  assured's  right  of  action  against  any  other  person  re- 
sponsible for  the  loss.  But  the  right  of  the  insurer  against  such 
other  person  does  not  arise  upon  any  relation  of  contract  or  privity 
between  them.  It  arises  out  of  the  nature  of  the  contract  of  insur- 
ance as  a  contract  of  indemnity,  and  is  derived  from  the  assured  alone 
and  can  be  enforced  in  his  right  only.  By  the  strict  rules  of  the 
common  law  it  must  be  asserted  in  the  name  of  the  assured;  in  a 
court  of  equity  or  of  admiralty,  or  under  some  of  the  state  codes,  it 
may  be  asserted  by  the  insurer  in  his  own  name,  but  in  any  form  of 
remedy  the  insurer  can  take  nothing  by  subrogation  but  the  rights 
of  the  assured,  and  if  the  assured  has  no  right  of  action,  none  passes 
to  the  insurer." 

§  22.  Loss  caused  by  negligence. — A  contract  of  insurance  covers 
a  loss  occasioned  by  the  negligence  of  the  insured,  unless  the  negli- 
gence is  so  gross  as  to  show  an  evil  intent.68  If  the  loss  is  caused  by 

"Healey  v.  Mutual  Ace.  Ass'n,  133  10  S.  D.  82,  66  Am.  St.  685  (1897); 

111.  556,  23  Am.  St.  637  (1890).  See  Pool  v.  Milwaukee,  etc.,  Ins.  Co., 

Employers',  etc.,  Corp.  v.  Merrill,  91  Wis.  530,  51  Am.  St.  919  (1895); 

155  Mass.  404  (1892).  Richelieu,  etc.,  Co.  v.  Boston,  etc., 

"St.  Louis,  etc.,  R.  Co.  v.  Com-  Ins.  Co.,  136  U.  S.  408  (1889).  See 

mercial,  etc.,  Ins.  Co.,  139  U.  S.  223,  Union  Ins.  Co.  v.  Smith,  124  U.  S. 

235  (1890).  See  §  339,  infra.  405  (1888). 

""Angler   v.   Western   Assur.    Co., 


§    23  THE    CONTRACT   OF    INSURANCE.  30 

some  one  other  than  the  insured,  the  wrongdoer  must  not  be  re- 
leased without  the  consent  of  the  insurer,  as  such  a  release  would  bar 
the  right  of  action  upon  the  insurance  contract.69  So,  where  the 
wrongdoer  pays  the  insured  with  knowledge  of  the  fact  that  the 
insurer  has  made  a  payment  under  the  policy,  it  is  a  fraud  upon  the 
insurer,  and  will  not  protect  the  wrongdoer.70 

§  23.  Form  of  the  contract. — It  is  customary  to  reduce  the  con- 
tract of  insurance  to  writing,  but  this  is  not  necessary  unless  required 
by  statute,  as  a  parol  contract  of  insurance  is  valid.71  An  oral  con- 
tract of  insurance  was  good  at  common  law.  Emerigon  says:72 
"Valin  and  Pothier  agree  in  saying  that  in  insurance  a  writing  is 
only  required  for  the  proof  of  the  contract;  that  the  writing  is  ex- 
trinsic to  the  substance  of  the  agreement.  They  are  reduced  to  writ- 
ing for  the  purpose  of  more  easily  preserving  their  proof.  *  *  * 
But  the  common  law  rule  ceases  its  operation  in  all  cases  where  a 
writing  is  expressly  required  by  law."  It  has  been  held  that  an  oral 
contract  of  insurance  is  invalid,  but  at  the  present  time  "the  rule 
is  well  settled  that  the  policy  is  only  evidence  of  the  contract,  and 
the  latter  may  be  shown  by  parol  when  the  policy  has  not  been  writ- 
ten, or  is  withheld,  unless  such  contract  is  forbidden  by  statute  or  a 
provision  in  the  company's  charter  which  is  brought  to  the  notice  of 
the  other  contracting  party.  And,  as  in  other  cases  of  parol  contracts, 
the  terms  of  the  agreement  and  the  assent  of  the  parties  may  be 

80  Newcomb  v.  Cincinnati  Ins.  Co.,  v.  Fireman's  Fund  Ins.  Co.,  34  Minn. 

22  Ohio  St.  382  (1872);  Hall  v.  Rail-  372  (1885),  38  Minn.  74  (1887).     In 

road     Co.,     13     Wall     (U.     S.)     367  Cockerill  v.  Cincinnati,  etc.,  Ins.  Co., 

(1871).  16  Ohio  148  (1847),  it  was  held  that 

T0  Connecticut  F.  Ins.  Co.  v.  Erie  a  contract  of  insurance  must  be  in 

R.   Co.,   73    N.   Y.   399    (1878).     See  writing;   but  the  case  was  reversed 

Allen   v.    Chicago,    etc.,    R.    Co.,    94  in  Dayton  Ins.  Co.  v.  Kelly,  24  Ohio 

Wis.  93,  68  N.  W.  873    (1896).  St.    345,    15    Am.    Rep.    612    (1873). 

"Trustees  v.  Brooklyn  F.  Ins.  AS  to  the  validity  of  an  oral  con- 
Co.,  19  N.  Y.  305  (1859);  Fish  v.  tract  of  insurance,  see  Newark 
Cottenet,  44  N.  Y.  538,  4  Am.  Rep.  Mach.  Co.  v.  Kenton  Ins.  Co.,  50 
915  (1871);  Ruggles  v.  American  Ohio  St.  549,  22  L.  R.  A.  768,  and 
Cent.  Ins.  Co.,  114  N.  Y.  415  (1889);  note  (1893).  In  a  number  of  states 
British  Ins.  Co.  v.  Lambert,  26  Ore.  there  are  statutes  providing  that  a 
199  (1894);  Croft  v.  Hanover  F.  contract  of  insurance  need  not  be 
Ins.  Co.,  40  W.  Va.  508,  21  S.  E.  854  under  seal. 

(1895);   Emery  v.  Boston  Mar.  Ins.        "Emerigon   Ins.    (Meredith's  ed., 

Co.,  138  Mass.   398    (1885);    Ganser  1850)  25. 


31  DEFINITION,    NATURE,    AND    MANNER    OF    MAKING.  §    24 

shown  by  their  acts  and  the  attending  circumstances  as  well  as  by  the 
words  they  have  employed."73 

In  view  of  the  custom  of  insurance  companies  of  using  written 
policies,  there  is  a  strong  presumption  where  no  policy  has  been  issued 
and  no  premium  paid  that  no  contract  has  been  entered  into.74 

§  24.  Statutory  form — Conditions  implied  in  an  oral  contract. — 
Many  states  now  prescribe  a  form  of  contract  known  as  the  standard 
policy,  but  these  requirements  do  not  change  the  rule,  and  an  oral 
contract  is  binding  if  it  can  be  proven  by  satisfactory  evidence.  A 
parol  contract  to  insure  or  for  insurance  is,  unless  other  terms  are 
agreed  upon,  construed  as  an  agreement  to  insure  upon  the  terms  ex- 
pressed in  the  written  policy  ordinarily  used  by  the  company.75  Where 
a  standard  policy  is  required  an  oral  contract  is  presumed  to  contem- 
plate insurance  upon  the  terms  and  subject  to  the  conditions  of  such 
policy.  Hence,  the  rights  of  one  whose  property  is  destroyed  by  fire 
after  an  oral  contract  to  insure,  but  before  the  policy  is  issued,  are 
subject  to  the  provisions  of  the  standard  policy,  and  he  can  recover 
only  upon  compliance  with  the  conditions  required  by  such  policy. 
"The  contract  of  insurance,"  says  Chief  Justice  Parker,76  "although 
verbal,  embraced  within  it  the  provisions  of  the  standard  policy  of  fire 
insurance,  which  the  legislature  in  its  wisdom  formulated  for  the 
protection  of  both  the  insured  and  the  insurer.  It  is  usual  for  the 
company  to  issue  a  policy  evidencing  the  contract  between  the  par- 

73  Newark  Mach.  Co.  v.  Kenton  Ins.  71i  Hicks  v.  British  Amer.  Ass.  Co., 
Co.,  50  Ohio  St.  549,  22  L.  R.  A.  768  162  N.  Y.  284,  48  L.  R.  A.  424  (1900). 
(1893),  annotated.  A  policy  issued  in  pursuance  of  an 

74  Equitable  L.  Assur.  Soc.  v.  Me-  oral  contract  to  insure  will  be  pre- 
Elroy,  83  Fed.  631,  28  C.  C.  A.  365  sumed  to  embody  all  the  terms  of 
(1897);    Heiman    v.     Phoenix,     etc.,  the  contract,  and  in  the  absence  of 
Ins.    Co.,    17    Minn.    153,     Gil.     127  fraud  or  mistake  will  be  conclusive 
(1871).  as  to  the  terms  of  such  contract: 

75  Lipman  v.  Niagara  F.  Ins.  Co.,  McLaughlin  v.  Equitable  L.  Assur. 
121  N.  Y.  454,  8  L.  R.  A.  719  (1890);  Soc.,    38    Neb.    725,    57    N.    W.    557 
Karelsen  v.  Sun  Fire  Office,  122  N.  (1894).     But  a  parol  contract  to  is- 
Y.  545    (1890);    Salisbury  v.  Hekla  sue  a  policy  is  not  merged  in  a  writ- 
Fire  Ins.  Co.,  32  Minn.  458   (1884);  ten  policy  which  does  not  cover  all 
Barre  v.  Council  Bluffs  Ins.  Co.,  76  the    terms    of   the    parol    contract: 
Iowa  609    (1889);    Eames  v.   Home  Nebraska,  etc.,  Ins.  Co.  v.  Seivers,  27 
Ins.  Co.,  94  U.  S.  621    (1876);   New-  Neb.  541,  43  N.  W.  351  (1889). 

ark  Mach.  Co.  v.  Kenton  Ins.  Co.,  50 
Ohio  St.  549   (1893). 


§    25  THE    CONTRACT    OF   INSURANCE.  32 

ties,  but  the  policy  accomplishes  nothing  more  than  that,  for  when 
the  contract  is  entered  into  between  the  agent  and  the  owner,  whether 
the  binder  be  verbal  or  in  writing,  it  includes  within  it  the  standard 
form  of  policy  and  the  contract  is  a  completed  one." 

§  25.  Statute  of  frauds. — A  contract  of  insurance  is  not  within 
the  provisions  of  the  statute  of  frauds  which  requires  "every  agree- 
ment which  by  its  terms  is  not  to  be  performed  within  one  year  from 
the  making  thereof  to  be  in  writing."  The  thing  to  be  done  under 
such  a  contract  depends  upon  a  contingency  which  may  happen  within 
one  year.77  So,  an  agreement  to  make  a  policy  or  renew  a  policy  or  a 
contract  of  reinsurance  is  not  within  the  statute.78 

§  26.  Renewal  by  parol. — An  existing  written  policy  of  insurance 
may  be  renewed  by  parol.  An  insurance  company  can  not  limit  its 
power  of  action  by  a  provision  in  a  policy  that  the  power  that  made  the 
contract  can  not  modify  it.  Hence,  a  policy  may  be  renewed  by  a 
parol  agreement  of  an  authorized  agent  of  the  company,  although  it 
contains  a  provision  that  it  shall  not  be  so  renewed.  The  making 
of  the  parol  agreement  amounts  to  a  waiver  of  the  provisions  in  the 
policy.79 

§  27.  Effect  of  charter  provisions. — There  are  cases  which  hold 
that  where  the  charter  of  an  insurance  company  requires  the  contract 
to  be  in  writing,  it  has  not  the  power  to  make  an  oral  contract  of  in- 
surance.80 Where  the  insured  has  knowledge  of  the  limitations  con- 
tained in  the  corporate  charter,  it  is  reasonable  that  he  should  be 
bound  thereby,  but  it  is  difficult  to  state  general  rules  applicable  to  all 
cases.  Charter  provisions  relating  to  the  execution  of  a  policy  should 

77  Sanford  v.  Orient  Ins.  Co.,  174  79  Cohen  v.  Continental,  etc.,  Ins. 
Mass.  416,  75  Am.   St.  358    (1899);  Co.,    67    Tex.    325,    6   Am.   Rep.    324 
Commercial,  etc.,  Ins.  Co.  v.  Union  (1887).     See  Royal  Ins.  Co.  v.  Beat- 
M.    Ins.   Co.,   19   How.    (U.    S.)    318  ty,  119  Pa.  St.  6  (1888). 

(1856).  '"'Head  v.  Providence  Ins.  Co.,  2 

78  Wiebeler  v.  Milwaukee,  etc.,  Irs.  Cranch    (U.    S.)    127,     150     (1804); 
Co.,  30  Minn.  464    (1883);    Sanborn  Spitzer   v.    St.    Mark's     Ins.    Co.,    6 
v.    Fireman's    Ins.     Co.,     16    Gray  Duer  (N.  Y.)  6  (1855);  but  see  Ins. 
(Mass.)  448,  77  Am.  Dec.  419  (1860);  Co.    v.    Colt,    20   Wall.    (U.    S.)    560 
Howard    Ins.   Co.   v.   Owen,   94   Ky.  (1874). 

197  (1893);  Walker  v.  Metropolitan 
Ins.  Co.,  56  Me.  371   (1868). 


33  DEFINITION,    NATURE,   AND    MANNER   OF    MAKING.  §    28 

not,  in  the  absence  of  words  of  restriction  or  a  plain  denial  of  such 
power,  be  construed  to  limit  the  power  of  the  corporation  or  to 
prevent  it  from  making  parol  contracts  within  the  ordinary  scope  of 
its  charter  powers.81 

A  statute  which  requires  all  policies  to  be  signed  by  the  president 
and  countersigned  by  the  secretary  of  the  corporation  will  not  pre- 
vent the  making  of  a  valid  oral  contract  to  insure.82  Although  the 
charter  limited  the  power  of  the  corporation  to  make  valid  insurance 
by  a  policy  not  under  seal  and  signed  by  the  president  and  secretary, 
it  was  held  that,  before  a  policy  was  executed,  a  general  agent  of  the 
company  might  make  a  parol  agreement  that  a  policy  would  be  issued, 
and  that  a  court  of  equity  would  compel  the  corporation  specifically  to 
perform  such  an  agreement.83 

§  28.  Kevenue  stamps. — A  statute  which  requires  an  insurance 
policy  to  bear  a  revenue  stamp  is  generally  held  not  to  affect  the  valid- 
ity of  the  contract.  If  such  contracts  are  in  fact  reduced  to  writing, 
they  require  a  stamp  under  the  federal  statute,  but  the  great  majority 
of  the  state  courts  hold  that  the  laws  of  congress  in  regard  to  the  ad- 
mission of  unstamped  instruments  in  evidence  apply  only  to  the 
federal  courts.84  There  is  certainly  serious  doubt  as  to  the  power  of 
congress  to  declare  a  contract  void  because  it  does  not  bear  a  proper 
revenue  stamp.  "It  has  been  repeatedly  decided,"  says  Judge 
Cooley,85  "that  the  act  of  congress  which  provided  that  certain  papers 
not  stamped  should  not  be  received  in  evidence  must  be  limited  in  its 

81  See  1  Joyce  Ins.,  §  35.  915  (1901);  Knox  v.  Rossi  (Nev.),  48 

s2Sanborn  v.   Fireman's  Ins.   Co.,  L.  R.  A.  305,  note,  57  Pac.  179  (1900); 

16  Gray    (Mass.)    448,   77  Am.   Dec.  Wingert  v.  Zeigler   (Md.),  51  L.  R. 

419    (1860);    Commercial,   etc.,   Ins.  A.   316    (1900);    Carpenter  v.   Snel- 

Co.  v.  Union  Mut.  Ins.  Co.,  19  How.  ling,   97   Mass.    452    (1867).     Unless 

(U.  S.)  318  (1856);  Hening  v.  U.  S.  stamp   was  omitted  with  intent  to 

Ins.  Co.,  2  Dill.    (C.  C.)   26    (1872).  defraud:     Green    v.     Holway,     101 

Contra,  Henning  v.  U.  S.  Ins.  Co.,  Mass.  243  (1869);  Hitchcock  v.  Saw- 

47  Mo.  425,  4  Am.  Rep.  332   (1871).  yer,    39    Vt.    412    (1867);    Griffin   v. 

83 Constant  v.  Ins.  Co.,  3  Wall.  Jr.  Ranney,  35  Conn.  239   (1868).     The 

(C.   C.)    313    (1861);    Security  Fire  leading  case  holding  the  contrary  is 

Ins.  Co.  v.  Kentucky,  etc.,  Ins.  Co.,  Chartiers  Co.  v.  McNamara,  72  Pa. 

7  Bush    (Ky.)    81,   3   Am.   Rep.   301  St.  278,  13  Am.  Rep.  673   (1872). 
(1869).  M  Cooley    Const.    Lim.     (5th    ed., 

84  Southern  Ins.  Co.  v.  North  Brit-  1883)   599,  note, 
ish,  etc.,  Ins.  Co.  (Tenn.),  52  L.  R.  A. 

3 — ELLIOTT  INS. 


§    29  THE    CONTRACT    OF   INSURANCE.  34 

operation  to  the  federal  courts.  Several  of  these  cases  have  gone  still 
farther  and  declared  that  congress  can  not  preclude  parties  from  en- 
tering into  contracts  permitted  by  the  state  laws,  and  that  to  declare 
them  void  is  not  the  proper  penalty  for  the  enforcement  of  a  tax  law." 

§  29.  Enforcement  of  oral  contract. — A  valid  oral  contract  to 
insure  may  be  either  specifically  enforced,  or  the  court  may  award 
damages  as  in  an  action  upon  the  policy.86  Where  the  negotiations 
have  reached  a  point  where  nothing  remains  for  either  party  but  to 
execute  what  has  been  agreed  upon,  the  courts  will  usually  compel 
the  issuance  of  the  policy  and  the  indemnification  of  the  insured. 
Where  it  appeared  that  a  voyage  was  undertaken  with  the  understand- 
ing that  the  risk  had  been  accepted  by  the  insurer,  and  that  the  policy 
would  be  issued  and  the  premium  paid  when  demanded,  it  was  said:87 
"It  is  well  established  that  upon  clear  proof  to  do  something,  the  con- 
summation of  which  involves  the  execution  of  a  written  instrument, 
which  is  afterwards  refused  to  be  made,  a  court  of  equity  will  coerce 
the  execution  of  the  written  contract  which  the  parol  evidence  has 
shown  to  be  agreed  upon." 

§  30.  Kinds  of  policies. — The  various  kinds  of  insurance  policies 
are  classified  as  open  or  valued,  wager  or  interest,  time  or  voyage. 

A  valued  policy  is  one  in  which  the  amount  of  the  indemnity  to  be 
paid  in  the  event  of  loss  is  fixed  by  the  terms  of  the  contract.  An 
open  policy  is  one  in  which  the  sum  to  be  paid  is  left  to  be  determined 
in  the  event  of  a  loss.  Under  the  former  the  actual  value  of  the 
subject-matter  need  not  be  proved,  as  the  sum  agreed  upon  is  con- 
clusive unless  it  appears  that  there  was  fraud  or  such  excessive  over- 
valuation as  in  itself  to  raise  the  presumption  of  fraud.88  A  policy 
may  be  open  as  to  certain  articles  and  valued  as  to  others.89 

88  Security  Fire  Ins.  Co.  v.  Ken-  v.  Northwestern  Ins.  Co.,  34  Me. 

tucky,  etc.,  Ins.  Co.,  7  Bush  (Ky.)  487  (1852);  Borden  v.  Hingham,  etc., 

81,  3  Am.  Rep.  301  (1869);  Gerrish  Ins.  Co.,  18  Pick.  (Mass.)  523 

v.  German  Ins.  Co.,  55  N.  H.  355  (1836).  In  many  states  all  policies 

(1875).  are  required  by  statute  to  be  valued. 

87  Phoenix  Ins.  Co.  v.  Ryland,  69  See  §  333,  infra.  As  to  the  policy  of 

Md.  437,  16  Atl.  109  (1888).  See  such  legislation,  see  a  paper  in  Proc. 

also  Wooddy  v.  Old  Dominion  Ins.  Am.  Bar  Ass'n,  1887,  by  Hervey 

Co.,  31  Gratt.  (Va.)  362  (1879).  Jackson,  Esq. 

"s  Alsop  v.  Commercial  Ins.  Co.,  1  »  Post  v.  Hampshire,  etc.,  Ins.  Co., 

Sumn.  (C.  C.)  451  (1833);  Cushman  12  Mete.  (Mass.)  555  (1847). 


35  DEFINITION,    NATURE,    AND    MANNER   OF    MAKING.  §    31 

A  wager  policy  is  one  in  which  it  appears  by  its  terms  that  the  in- 
sured has  no  interest  in  the  subject-matter  of  the  insurance.  It  is  a 
disputed  question  whether  such  policies  were  valid  at  the  common 
law,  but  however  that  may  have  been,  they  are  now  universally  pro- 
hibited. 

An  interest  policy  is  one  in  which  it  appears  by  its  terms  that  the 
insured  has  an  interest  in  the  subject-matter.90 

A  time  policy  is  one  in  which  the  duration  of  the  risk  is  fixed  for 
a  definite  period  of  time. 

A  voyage  policy  is  one  in  which  the  duration  of  the  risk  is  deter- 
mined by  geographical  limits.  It  is  applicable  to  transportation  upon 
land  or  water.91 

§  31.  Completion  of  the  contract — Delivery  of  the  policy. — A  con- 
tract of  insurance  is  completed  when  the  terms  have  been  agreed  upon 
between  the  parties.  The  reciprocal  rights  and  obligations  of  the 
parties  date  from  that  time,  without  reference  to  the  execution  and 
delivery  of  the  policy,  unless  these  elements  are  embraced  within  the 
terms  agreed  upon,  or  the  statute  makes  such  a  delivery  a  condition 
precedent  to  the  validity  of  the  contract.92 

If  there  has  been  no  payment  of  the  premium  and  no  delivery  of 
the  policy,  the  contract  is  prima  facie  incomplete,  and  the  party 
claiming  the  existence  of  a  contract  must  show  that  it  was  the  inten- 
tion of  the  parties  that  there  should  be  an  operative  contract.93 

It  is  ordinarily  necessary  that  the  policy  should  be  delivered  before 
the  contract  is  binding  upon  the  insurance  company,  unless  the  facts 
are  such  as  to  entitle  the  party  to  recover  upon  an  oral  contract  to  in- 
sure or  of  insurance.  This  does  not,  however,  require  actual  manual 
delivery,  as  an  agreement  upon  all  the  terms  and  the  issue  and  trans- 
mission to  the  agent  of  the  company  for  delivery  without  conditions 
are  equivalent  to  delivery  to  the  insured.94 

80  Williams  v.  Smith,  2  Caines  (N.  101   Mass.   279    (1869);    Heiman   v. 

Y.)    13,  and  note    (1804);    Alsop   v.  Phoenix  M.  L.  Ins.  Co.,  17  Minn.  153, 

Commercial   Ins.   Co.,   1   Sumn.    (C.  Gil.  127  (1871);  Lightbody  v.  North 

C.)  451   (1833).  Amer.    Ins.   Co.,   23   Wend.    (N.   Y.) 

"Boehm  v.  Combe,  2  Maule  &  S.  18   (1840);    Idaho,  etc.,  Co.  v.  Fire- 

172  (1813).  man's  Fund  Ins.  Co.,  8  Utah  41,  29 

92  Western  Assur.  Co.  v.  McAlpin,  Pac.  826  (1892). 

23    Ind.    App.    220,    77    Am.    St.    423         M  New  England  F.  &  M.  Ins.  Co. 

(1899).  v.    Robinson,    25    Ind.    536    (1865); 

MFaunce  v.  State,  etc.,  Assur.  Co.,  Whitaker  v.  Farmers'  Un.  Ins.  Co., 


§    32  THE    CONTRACT    OF   INSURANCE.  36 

But  a  mere  delivery  of  the  policy  to  an  agent,  to  be  delivered  to 
the  insured  upon  the  payment  of  the  premium,  is  not  a  delivery  to 
the  insured.  In  a  Massachusetts  case  it  is  said:95  "Previous  to  the 
time  of  receiving  the  policy  he  had  paid  no  money  and  signed  no  ob- 
ligation other  than  the  application.  It  is  clear  upon  this  statement 
that  there  was  no  oral  contract  of  insurance  and  no  contract  contem- 
plated except  upon  delivery  of  the  policy  and  payment  of  the  pre- 
mium. The  agent  was  the  agent  of  the  defendant  to  receive  the  pre- 
mium and  deliver  the  policy  for  it,  and  there  is  no  evidence  that  he 
had  authority  to  deliver  the  policy  except  upon  payment  of  the  pre- 
mium. There  was  no  contract  of  insurance  until  the  payment  of  the 
premium  and  delivery  of  the  policy." 

Delivery  is  a  question  of  intent  and  may  be  shown  by  any  act  in- 
tended to  signify  that  the  instrument  shall  have  present  validity.96 

The  rule  that  a  deed  can  not  be  delivered  conditionally  does  not 
apply  to  an  insurance  policy.  It  may  be  conditionally  delivered,  and 
the  performance  of  the  condition  is  a  condition  precedent  to  the  ex- 
istence of  the  contract  of  insurance.97  The  possession  of  the  policy  by 
the  insured  makes  a  prima  facie  case,  but  this  may  be  overthrown  by 
evidence  that  it  was  never  actually  delivered,  or  that  it  was  obtained 
by  misrepresentation  and  fraud.98 

§  32.  Countersigning  by  agent. — When  a  policy  provides  that  -it 
shall  not  be  binding  until  countersigned  by  a  certain  agent,  it  is  in- 
valid without  such  signature.99 

§  33.  Contracts  made  by  correspondence. — Contracts  of  insurance 
are  frequently  made  by  correspondence,  and  it  is  not  always  easy  to 

29  Barb.  (N.  Y.)  312   (1859);   Insur-  Ins.  Co.  v.  Walser,  22  Ind.  73  (1864); 

ance  Co.  v.  Colt,  20  Wall.  (U.  S.)  560  Hardie  v.   St.   Louis,  etc.,   Ins.  Co., 

(1874).  26    La.    An.    242    (1874);    Noyes    v. 

98  Wainer  v.  Milford,  etc.,  Ins.  Co.,  Phoenix,  etc.,   Ins.  Co.,  1   Mo.  App. 

153  Mass.  335    (1891).  584    (1876);    Lynn  v.   Burgoyne,   13 

"Commercial  Ins.  Co.  v.  Hallock,  B.  Mon.   (Ky.)  400   (1852).     Contra, 

27  N.  J.  L.  645  (1858).  Norton  v.  Phrenix,  etc.,  Ins.  Co.,  36 

97  Harnickell  v.  New  York  L.  Ins.  Conn.   503,   4   Am.   Rep.   98    (1870). 

Co.,  Ill  N.  Y.  390  (1888);  Benton  v.  In  Myers  v.  Keystone,  etc.,  Ins.  Co., 

Martin,  52  N.  Y.  570  (1873).  27  Pa.  St.  268  (1856),  it  is  said  that 

wFaunce  v.  State,  etc.,  Assur.  Co.,  such  a  provision  in  the  policy  may 

101  Mass.  279  (1869).  be  dispensed  with  where  the  inten- 

w  Badger  v.   American,    etc.,    Ins.  tion  is  clearly  shown. 
Co.,   103    Mass.   244    (1869);    Peoria 


37  DEFINITION,    NATURE,    AND    MANNER   OF    MAKING.  §    33 

determine  whether  a  contract  has  been  completed.     Such  contracts 
are  governed  by  the  following  rules: 

1.  When  an  offer  has  been  made  and  a  letter  of  acceptance  mailed 
within  a  reasonable  time,  the  contract  is  complete. 

2.  The  recall  of  an  offer  sent  by  mail,  in  order  to  be  of  any  effect, 
must  reach  the  party  to  whom  it  is  addressed  before  the  acceptance 
is  mailed. 

3.  An  acceptance,  in  order  to  complete  the  contract,  must  be  un- 
conditional and  in  accordance  with  the  terms  of  the  offer. 

4.  The  acceptance  need  not  be  by  letter,  but  may  be  by  any  other 
method  sufficient  to  show  a  formal  determination  to  accept,  commu- 
nicated or  put  in  a  way  to  be  communicated  to  the  party  making  the 
offer.     A  mere  mental  assent,  not  communicated,  is  insufficient,  and 
this  is  also  true  of  silence  or  neglect  to  respond,  although  the  party 
has  done  all  that  is  required  of  him.     Changes  or  modifications  made 
by  either  party  after  the  terms  of  the  contract  are  agreed  upon  must 
be  accepted  by  the  other  party.     Thus,  if  an  agent  agrees  with  the 
applicant  upon  the  terms  of  the  insurance,  subject  to  the  approval  of 
the  principal,  and  the  principal  returns  the  policy  with  certain  modifi- 
cations, the  contract  is  not  consummated  until  the  new  terms  are 
accepted  by  the  applicant.100 

100  Myers  v.  Keystone,  etc.,  Ins.  Culloch  v.  Eagle  Ins.  Co.,  1  Pick. 
Co.,  27  Pa.  St.  268  (1856).  As  to  (Mass.)  278  (1822);  Thayer  v.  Mid- 
contracts  by  correspondence  gener-  dlesex,  etc.,  Ins.  Co.,  10  Pick, 
ally,  see  Adams  v.  Lindsell,  1  Barn.  (Mass.)  326  (1830);  article  in  West- 
&  Aid.  681  (1818);  Mactier  v.  Frith,  ern  Jurist,  May,  1882,  p.  339. 
6  Wend.  (N.  Y.)  103  (1830);  Me- 


PART  II. 

OF  THE  SUBJECT-MATTER  OF   INSURANCE   AND 

THE  INTEREST  NECESSARY  TO  SUPPORT 

THE  CONTRACT. 


CHAPTEK  III. 

INSURABLE  INTEREST  IN  PROPERTY. 

SEC.  SEC. 

40.  The  subject-matter.  45.  Time  of  interest. 

41.  Insurable  interest.  46.  Continuity  of  interest. 

42.  Definition.  47.  Nature  of  interest. 

43.  Nature  of  insurable  interest.         48.  Illustrations. 

44.  Different  interests. 

§  40.  The  subject-matter. — The  property  or  life  in  which  the  in- 
terest exists  is  commonly  called  the  subject-matter  of  the  insurance. 
While  this  is  convenient,  it  is  not  strictly  accurate,  as  the  real  subject 
of  the  insurance  is  the  interest,  and  not  the  property.  The  person 
having  the  interest  in  the  property  is  insured  against  loss  to  the  ex- 
tent of  that  interest. 

§  41.  Insurable  interest. — The  requirement  that  a  party  shall 
have  an  interest  in  the  property  covered  by  the  policy  of  insurance 
rests  upon  the  fundamental  principle  that  contracts  of  insurance  are 
for  indemnity,  and  not  for  profit.  There  can  be  no  indemnity  where 
there  is  no  loss,  and  no  loss  where  there  is  no  interest.  Such  insur- 
ance can  have  no  other  legitimate  object  than  that  of  protection  from 
loss  which  may  flow  directly  from  damage  to  the  subject-matter.  Life 
insurance  is  also  more  or  less  affected  by  this  principle.  The  courts 
have  not,  in  the  development  of  this  department  of  insurance  law, 
been  guided  by  any  clearly  denned  principle.  In  some  cases  of  recent 

(38) 


39  INSURABLE    INTEREST   IN    PROPERTY.  §    41 

date  it  is  argued  that  life  insurance  contracts  are  simply  for  the  in- 
demnification of  the  beneficiary,  who  can,  therefore,  recover  only  the 
actual  amount  of  his  loss  caused  by  the  death  of  the  insured.  It  is 
also  said  that  the  interest  in  life  which  is  insurable  is  simply  pecu- 
niary, and  that  only  one  who  is  so  situated  toward  the  life  that  he 
will  suffer  a  money  loss  by  the  death  has  an  insurable  interest.  Under 
this  rule  the  amount  of  the  policy  must  bear  some  reasonable  relation 
to  the  value*  of  the  interest.  By  treating  the  policy  as  in  the  nature 
of  a  valued  policy  and  holding  that  it  lapses  upon  the  loss  of  the  in- 
terest, the  contract  is  rested  upon  the  principle  of  indemnity.  By  the 
weight  of  authority  life  insurance  contracts  are  not  for  indemnity, 
but  merely  for  the  payment  of  a  stipulated  sum  of  money  upon  the 
happening  of  a  certain  event  at  an  uncertain  time  in  the  future.  Its 
modern  forms  commonly  contemplate  investment  as  well  as  protec- 
tion, and  pass  freely  by  assignment  with  the  consent  of  the  company. 
Life  insurance  contemplates  protection  and  often  profit,  while  all 
other  insurance  is  properly  for  indemnification  only.  One  purchases 
indemnity  from  loss ;  the  other  invests  in  the  hope  of  gain.  The  law 
recognizes  this  difference  and  sustains  insurance  upon  lives  because 
experience  has  shown  that  it  is  a  beneficent  contract  and  that  the  fears 
of  the  early  courts  and  legislators  were  merely  fanciful. 

But  gambling  contracts  are  invalid  without  reference  to  their  sub- 
ject-matter, and  a  wager  in  the  form  of  a  life  insurance  contract  is 
no  exception  to  this  rule.  It  was  thought  at  first  that  human  life 
was  too  sacred  to  be  made  the  subject  of  a  contract,  but  this  idea 
passed,  leaving  the  rule  that  it  could  be  insured  under  conditions 
which  were  supposed  to  neutralize  the  temptation  of  the  beneficiary 
to  destroy  the  life.  This  safeguard  is  found  in  the  rule  which  re- 
quires that  the  beneficiary  of  the  policy  must,  at  least  when  the  in- 
surance is  affected,  have  such  an  interest  in  the  continuation  of  the 
life  as  to  remove  the  temptation  to  hasten  the  event  from  which  he 
would  receive  a  financial  benefit.  Ordinarily  the  interest  is  a  pecu- 
niary one  which  is  thus  set  against  the  financial  interest  in  the  death. 
But  the  reason  of  the  rule  does  not  require  the  interest  to  be  of  this 
character,  as  there  are  other  conditions  which  experience  teaches  us 
are  of  equal  or  even  greater  potency.  If  the  purpose  of  requiring 
an  interest  is  to  remove  the  temptation  to  destroy  life,  it  is  apparent 
that  the  temptation  of  a  creditor  to  destroy  the  life  of  his 
insolvent  debtor  is  greater  than  that  of  the  father  to  destroy  the  life 
of  his  weak-minded  and  helplessly  crippled  child.  The  prohibition 


§    42  SUBJECT-MATTER   AND   INSTJRABLE    INTEREST.  40 

is  against  wager  or  speculative  contracts,  and  when  the  circumstances 
are  such  as  to  free  the  contract  from  this  implication  it  should  be 
sustained,  although  the  interest  is  not  pecuniary.  It  will  be  found, 
however,  that  there  are  many  decisions  to  the  effect  that  a  valid  policy 
can  only  be  sustained  by  a  pecuniary  interest.1 

§  42.  Definition. — Every  interest  in  property  or  in  relation  thereto 
or  liability  in  respect  thereof,  of  such  a  nature  that  a  contemplated 
peril  may  directly  damnify  the  insured,  is  an  insurable  interest.  In 
life  insurance  every  person  has  an  insurable  interest  in  the  life  and 
health  of  himself  "^r  any  person  on  whom  he  depends  wholly  or  in 
part  for  support  or  education,  or  any  person  under  a  legal  obligation 
to  him  for  the  payment  of  money,  or  respecting  property  or  services 
of  which  death  or  illness  might  delay  or  prevent  the  performance,  and 
of  any  person  upon  whose  life  any  estate  or  interest  in  him  depends. 
"It  would  seem,  therefore,"  said  Mr.  Justice  Andrews,  "that  when- 
ever there  is -a  real  interest  to  protect,  and  a  person  is  so  situated  with 
respect  to  the  subject  of  insurance  that  its  destruction  would  or  might 
reasonably  be  expected  to  impair  the  value  of  that  interest,  an  in- 
surance on  such  interest  would  not  be  a  wager  within  the  statute, 
whether  the  interest  was  an  ownership  in  or  a  right  to  the  possession 
of  the  property  or  simply  an  advantage  of  a  pecuniary  character  hav- 
ing a  legal  basis,  but  dependent  upon  the  continued  existence  of  the 
subject.  It  is  well-settled  that  a  mere  hope  or  expectation  which  may 
be  frustrated  by  the  happening  of  some  event  is  not  an  insurable  in- 
terest."2 

§  43.  Nature  of  insurable  interest. — In  speaking  of  the  nature  of 
an  insurable  interest,  Mr.  Joyce,  following  the  language  of  Mr.  Jus- 

1  See  language  used  in  Cronin  v.  Trinity  College  v.  Travelers'  Ins. 

Vermont  L.  Ins.  Co.,  20  R.  I.  570  Co.,  113  N.  C.  244  (1893);  Lucena  v. 

(1898);  Insurance  Co.  v.  Bailey,  13  Crauford,  3  Bos.  &  P.  75  (1802); 

Wall.  (U.  S.)  616  (1871).  Wainer  v.  Milford  M.  F.  Ins.  Co., 

-Riggs  v.  Commercial,  etc.,  Ins.  153  Mass.  335,  11  L.  R.  A.  598 

Co.,  125  N.  Y.  7,  25  N.  B.  1058  (1890).  (1890).  A  person  need  not  hold  the 

See  also  Williams  v.  Roger  Wil-  title  if  he  is  so  situated  that  he 

Hams  Ins.  Co.,  107  Mass.  377  (1871);  would  suffer  loss  or  damage  by  the 

Warnock  v.  Davis,  104  U.  S.  775  destruction  of  the  property:  Home 

(1881);  Loomis  v.  Eagle,  etc.,  Ins.  Ins.  Co.  v.  Mendenhall,  164  111.  458, 

Co.,  6  Gray  (Mass.)  396  (1856);  36  L.  R.  A.  374  (1897). 


41  IXSURABLE  INTEREST  IN  PROPERTY.  §  44 

tice  Story,  says  :3  "An  insurable  interest  is  sui  generis,  and  peculiar 
in  its  texture  and  operation.  It  sometimes  exists  where  there  is  no 
present  property  or  jus  in  re  or  jus  ad  rerr^.  It  may  cover  inchoate 
rights  or  rights  in  expectation,  such  as  profits  or  commissions.  Again, 
a  person  may  be  so  circumstanced  that  it  may  be  important  that  a 
thing  should  have  a  continued  existence ;  or  he  may  be  so  related  to  or 
concerned  in  the  same  that  he  would  almost  positively  derive  a  cer- 
tain benefit  or  advantage  therefrom,  but  for  its  exposure  to  risks  and 
dangers,  in  which  case  he  is  interested  in  its  safety  or  situation." 

§  44.  Different  interests. — As  there  may  be  various  distinct  inter- 
ests in  a  subject-matter,  it  follows  that  different  parties  may  have 
distinct  insurable  interests  in  the  same  property.4 

§  45.  Time  of  interest. — It  was  formerly  held  that  the  interest 
necessary  to  support  an  insurance  on  property  must  exist  at  the  time 
the  contract  is  made  and  at  the  time  of  the  loss.5  It  is  probable  that 
the  greater  number  of  cases  announce  this  doctrine,6  although  there 
is  a  decided  tendency  toward  applying  the  same  rule  to  fire  insurance 
that  has  always  been  held  to  apply  to  marine  and  life  insurance.7  It 

3  Joyce  Ins.,  §  888.  Ins.  Co.,  176  Mass.  486,  57  N.  E.  998, 

4  Strong     v.    Manufacturers'    Ins.     79  Am.  St.  325  (1900). 

Co.,    10    Pick.    (Mass.)     40    (1830);  7  In  Sun  Ins.  Office  v.  Merz,  64  N. 

Columbian  Ins.  Co.  v.  Lawrence,  2  J.   L.   301,   52   L.   R.  A.   330    (1900), 

Pet.  (U.  S.)  25  (1829);  Herkimer  v.  the  court  said,  with  reference  to  the 

Rice,  27  N.  Y.  163  (1863).  claim   that   the    insurable    interest 

5  Lynch  v.  Dalzel,  3  Brown  Parl.  must  exist  at  the  time  the  contract 
Gas.  497   (1729);   Sadler  Co.  v.  Bad-  is  made:    "This  was  formerly  con- 
cock,  2  Atk.  554   (1743);   Fowler  v.  sidered  to  be  the  rule  with  relation 
New  York,  etc.,  Ins.  Co.,  26  N.  Y.  422  to  fire  policies,  and  was  so  declared 
(1863);  Hancox  v.  Fishing  Ins.  Co.,  both  by  text-writers  and  in  decided 
3    Sumn.    (C.    C.)    132,   142    (1837),  cases,  although  a  contrary  view  was 
Story,  J.     Contra,  Chrisman  v.  State  always  taken  in  construing  life  and 
Ins.  Co.,  16  Ore.   283,  288,   18   Pac.  marine  policies.     Why  any  such  va- 
466   (1888);   Home  Ins.  Co.  v.  Men-  riance  in  construction  existed  it  is 
denhall,  164  111.  458,  36  L.  R.  A.  374  difficult  to  understand;   for  certain- 
(1897);  Dickerman  v.  Vermont,  etc.,  ly  if  a  contract  to  insure  after-ac- 
Ins.  Co.,  67  Vt.  99,  30  Atl.  808  (1894).  quired    property   against   fire    is   a 
The  authorities   on  both   sides  are  wagering    contract,    and    therefore 
collected  in  a  note  to  52  L.  R.  A.  void  because  against  public  policy, 
330.  a  contract  to  insure  such  property 

0  This  is  the  rule  in  Massachu-  against  marine  risks,  or  a  contract 
setts:  Clinton  v.  Norfolk  Mut.  F.  to  insure  the  life  of  a  person  in  fa- 


SUBJECT-MATTER   AND   IXSURABLE    INTEREST. 


42 


does  not  appear  that  there  ever  was  any  reason  for  the  distinction. 
It  certainly  is  sufficient  if  the  insured  has  an  interest  under  any  status 
of  ownership  at  the  time  the  contract  is  made  unless  inquiry  is  made 
for  the  specific  interest.8  With  reference  to  the  rule  in  marine  in- 
surance, a  learned  writer,  who  is  quoted  with  approval  by  the  supreme 
court  of  the  United  States,  says  :9  "It  is  now  clearly  established  that 
an  insurable  interest  subsisting  during  the  risk  and  at  the  time  of  the 
loss  is  sufficient,  and  that  the  assured  need  not  also  allege  or  prove 
that  he  was  interested  at  the  time  the  contract  was  effected;  indeed, 
it  is  an  every  day's  practice  to  effect  insurance  in  which  the  allegation 
can  not  be  made  with  any  degree  of  truth :  as,  for  instance,  where 
goods  are  insured  on  a  return  voyage  long  before  they  are  bought.'' 
A  fire  insurance  policy  may  cover  goods  purchased  after  a  policy  has 
gone  into  effect.10  So,  crops  not  yet  grown  may  be  legally  insured.11 

§  46.  Continuity  of  interest. — It  follows  from  what  has  been  said 
in  the  preceding  section  that  the  interest  need  not  be  continuous.  In 
those  jurisdictions  which  hold  that  the  interest  need  not  exist  at  the 
time  the  policy  is  taken  out,  it  is  sufficient  if  it  exists  at  some  time 


vor  of  one  who  at  the  time  of  the 
taking  out  of  the  policy  has  no  in- 
terest therein,  are  equally  wagering 
contracts,  and  if  such  contracts  are 
prohibited  by  public  policy,  should 
equally  be  considered  void.  But, 
although  the  earlier  cases  on  fire 
insurance  laid  down  the  rule  enun- 
ciated by  the  supreme  court,  experi- 
ence has  taught  that  the  necessities 
of  business  and  the  adequate  protec- 
tion of  property  require  the  same 
methods  of  insurance  against  fire  as 
have  always  existed  with  relation 
to  losses  by  the  perils  of  the  sea. 
And  reflection  has  led  to  the  con- 
clusion that  contracts  of  insurance 
upon  property  in  which  the  insured 
has  no  interest  at  the  time  of  the 
issue  of  the  policy  are  not  wagers  if 
he  acquires  an  interest  during  the 
life  of  the  policy  and  retains  it  at 
the  time  when  the  loss  occurs." 


s  Insurance  Co.  v.  Haven,  95  U.  S. 
242  (1877). 

11 1  Arnould  Mar.  Ins.  (Maclach- 
lan's  ed.)  59;  quoted  in  Hooper  v. 
Robinson,  98  U.  S.  528  (1878).  See 
also,  Boston  Ins.  Co.  v.  Globe  Fire 
Ins.  Co.,  174  Mass.  229,  75  Am.  St. 
303  (1899);  Lucena  v.  Craufurd,  2 
Bos.  &  P.  N.  R.  295,  6  Rev.  Rep. 
623  (1802). 

'"West  Branch  Ins.  Co.  v.  Hel- 
fenstein,  40  Pa.  St.  289,  80  Am.  Dec. 
573  (1861);  Western,  etc.,  Pipe 
Lines  v.  Home  Ins.  Co.,  145  Pa.  St. 
346  (1891);  Nutts  v.  Farmers'  Ins. 
Co.,  37  Iowa  400  (1873).  Policy  held 
to  cover  a  horse  acquired  in  ex- 
change for  the  one  owned  when  it 
was  taken  out:  See  Wood  v.  Rut- 
land, etc.,  Ins.  Co.,  31  Vt.  552  (1859), 
and  note  to  Strong  v.  Manufac- 
turers' Ins.  Co.,  20  Am.  Dec.  518. 

11  Grant  v.  Parkinson,  3  Bos.  &  P. 
85n. 


43 


INSURABLE   INTEREST    IN    PROPERTY. 


47 


during  the  risk  and  at  the  time  of  the  loss.  But  policies  now  gen- 
erally contain  a  provision  forbidding  a  change  of  title  or  the  aliena- 
tion of  the  property  under  a  penalty  of  forfeiture.  This  provision 
is  effective,12  but  in  its  absence  the  contract  is  merely  suspended  dur- 
ing the  time  the  interest  is  gone,  and  revives  to  secure  the  new  interest 
acquired  before  the  loss.13 

A  condition  against  alienation  is  strictly  construed  and  refers  only 
to  an  entire  and  absolute  divestiture  of  interest.14  If,  at  the  time  of 
the  loss,  a  partial  interest  remains,  recovery  may  be  had  to  that  ex- 
tent.15 Thus,  where  the  insured  incumbered  personal  property  con- 
trary to  the  provisions  of  the  policy,  it  was  held  that  he  was  neverthe- 
less entitled  to  recover  if  the  lien  had  been  removed  before  the  time 
of  the  loss.10  A  life  policy  originally  valid  is  generally  held  not  to 
be  invalidated  by  loss  of  interest.17 

§  47.  Nature  of  interest. — The  interest  which  may  be  insured 
must  be  neither  illegal  nor  immoral.18  It  may  be  either  legal  or 
equitable,19  but  it  is  not  necessary  that  the  party  should  have  either  a 


12  §  265,  infra;  Home  Mut.  F.  Ins. 
Co.  v.  Hauslein,  60  111.  521    (1871). 

13  Worthington  v.  Bearse,  12  Allen 
(Mass.)  382   (Isob);  Clinton  v.  Nor- 
folk Mut.  F.  Ins.  Co.,  176  Mass.  486, 
79  Am.  St.  325   (19UO). 

"Clinton  v.  Norfolk  Mut.  F.  Ins. 
Co.,  176  Mass.  486,  79  Am.  St.  325 
(1900);  Jackson  v.  Massachusetts, 
etc.,  Ins.  Co.,  23  Pick.  (Mass.)  418 
(1839);  Power  v.  Ocean  Ins.  Co.,  19 
La.  28,  36  Am.  Dec.  665  (1841); 
Dolliver  v.  St.  Joseph,  etc.,  Ins.  Co., 
9  Ins.  L.  J.  293,  and  note  on  "aliena- 
tion." 

15  Cowan  v.  Iowa,  etc.,  Ins.  Co.,  40 
Iowa  551  (1875);  yEtna  F.  Ins.  Co.  v. 
Tyler,  16  Wend.  (N.  Y.)  385  (1836). 
See   monographic  note  to   Lane    v. 
Maine,   etc.,   Ins.   Co.,   28  Am.   Dec. 
155,  and  Ayres  v.  Hartford  F.  Ins. 
Co.,  17  Iowa  176,  85  Am.  Dec.  553. 

16  Omaha  F.  Ins.  Co.  v.  Dierks,  43 
Neb.  569,  61  N.  W.  745  (1895).     But 
see   Imperial   F.   Ins.   Co.    v.    Coos 
County,  151  U.  S.  452  (1893);  §  262, 
infra. 


17  Connecticut,    etc.,     Ins.    Co.    v. 
Schaefer,   94  U.   S.   457    (1876).     In 
this  case  Mr.  Justice  Bradley  said: 
"in  a  lucid  judgment  delivered  by 
Baron  Parke  in  the  exchequer  cham- 
ber, in  the  case  of  Dalby  v.  India, 
etc.,  Assur.  Co.,  decided  in  1854,  15 
C.  B.  365,  it  was  held  that  the  true 
meaning  of  the  statute  is,  that  there 
must  be  an  interest  at  the  time  that 
the  insurance  is  effected,  but  that  it 
need  not  continue  until  death." 

18  Lord     v.     Ball,     12     Mass.     115 
(1815);    Carrigan    v.    Lycoming    F. 
Ins.  Co.,  53  Vt.  418    (1881).     An  in- 
surance of  liquors  kept  for  illegal 
sale   is  invalid;    but  where  the   in- 
sured  was  a  druggist,   and   only   a 
small   portion  of  the  property   was 
liquor,  and  nothing  of  illegality  ap- 
peared in  the  contract,  which  was 
collateral  to  the  occasional  acts  of 
illegal  selling,  the  policy  was  held 
valid.     See  §  14,  supra. 

19  The  holder  of  such  interest  may 
describe  himself  as  owner:     Guest 
v.   New  Hampshire  F.   Ins.  Co.,   66 


§    47  SUBJECT-MATTER   AND   INSURABLE    INTEREST. 

legal  or  equitable  title  to  the  property.20  The  interest  may,  be  either 
conditional  or  contingent.  Thus,  Arnould  says:21  "A  vested  in- 
terest in  possession  is  not  necessary  to  give  the  right  of  insuring.  An 
expectancy  coupled  with  a  present  existing  title  to  that  out  of  which 
the  expectancy  arises  is  an  insurable  interest."  Judge  Story  says:22 
"Inchoate  rights  founded  upon  titles  subsisting  at  the  time  of  loss, 
unless  prohibited  by  the  policy  of  the  law,  are  insurable."  An  inter- 
est under  a  contract  which  is  not  enforcible  either  at  law  or  equity 
is  not  insurable.23  An  insurable  interest  does  not  imply  ownership 
of  the  property  or  even  a  right  to  its  possession.24  A  person  may  in- 
sure his  interest  in  expected  commissions,25  or,  in  what  seems  an  ex- 
treme case,  an  expected  catch  of  fish.26  But  in  all  such  cases  an  ex- 
pectation of  profit  or  benefit  must  arise  out  of  some  subject  in  which 
the  party  is  actually  interested  at  the  time  of  the  loss,  and  it  is  not 
enough  that  he  only  expects  to  be  interested  in  such  property.27  A 
person  who  is  liable  to  others  for  the  loss  or  destruction  of  property 
in  which  he  has  no  actual  interest  may  have  an  insurable  interest 
therein.  Thus,  common  carriers,  warehousemen,  pawnbrokers  and 
such  persons  have  an  insurable  interest  in  the  property  for  which  they 

Mich.  98  (1887);  Elliott  v.  Ashland,  Liberty  Ins.  Co.,  44  Neb.  537,  48  Am. 

etc.,  Ins.  Co.,  117  Pa.  St.  548  (1888).  bt.  753  (1895). 

20  Rohrbach  v.  Germania,  etc.,  Ins.  25  Putnam  v.  Mercantile  Mar.  Ins. 

Co.,  62  N.  Y.   47    (1875);    National,  Co.,  5  Mete.  (Mass.)  086,  392  (1843). 

etc.,  Co.  v.  Citizens'  Ins.  Co.,  106  N.  2fl  Swift   v.    Mercantile   Mut.     Ins. 

Y.  535,  541   (1887);   Carter  v.  Hum-  Co.,  113  Mass.  287  (1873). 

boldt  F.  Ins.  Co.,  12  Iowa  287  (1861).  2T  See  Hayes  v.  Milford  M.  F.  Ins. 

21 1  Arnould  Mar.  Ins.  58.  Co.,    170    Mass.    492,    49    N.    E.    754 

22Hancox   v.    Fishing    Ins.    Co.,    3  (1898);     Warren    v.    Davenport    F. 

Sumn.  (C.  C.)  132  (1837).  Ins.  Co.,  31  Iowa  464   (1871);  Rohr- 

23  Perry    v.    Mechanics'    Mut.    Ins.  bach  v.  Germania,  etc.,  Ins.  Co.,  62 
Co.,  11  Fed.  478   (1879);  Redfield  v.  N.  Y.  47.     In  Eastern  R.  Co.  v.  Re- 
Holland  Purchase  Ins.  Co.,  56  N.  Y.  lief    Fire    Ins.    Co.,    98    Mass.    420 
354  (1874).  (1868),  Mr.  Justice  Gray  said:    "By 

24  One  who  has  neither  the  legal  the  law  of  insurance  any  person  has 
nor  equitable  title,  nor  the  right  of  an  insurable  interest  in  property  by 
possession  of  property,  has  an  insur-  the  existence  of  which  he  receives 
able  interest  if  he  will  derive  a  bene-  a  benefit  or  by  the  destruction  of 
fit  from  its  continuing  to  exist,  or  which  he  will  suffer  a  loss,  whether 
suffer   a   loss    by    its    destruction:  he  has  or  has  not  any  title  in  or 
Hanover,  etc.,  Ins.  Co.  v.  Bohn,  48  lien  upon,  or  possession  of  the  prop- 
Neb.    743,    58    Am.    St.    719    (1896).  erty  itself." 

bee  note  to  Rochester,  etc.,  Co.  v. 


45 


INSURABLE   INTEREST   IN    PROPERTY. 


are  made  responsible  by  statute  or  custom.28  So,  a  railroad  company 
which  is  liable  by  law  for  injury  to  property  along  its  line,  caused  by 
fire  from  its  engines,  has  an  insurable  interest  in  such  property.29 
The  fact  that  the  interest  may  possibly  be  defeated  does  not  prevent 
it  from  being  insurable.30 

§  48.  Illustrations. — The  following  cases  selected  from  the  in- 
numerable number  found  in  the  books  will  illustrate  the  interest 
which  the  law  recognizes  as  insurable : — A  vendee  of  land  in  posses- 
sion under  an  executory  contract  of  purchase,  who  is  entitled  to  a 
deed  upon  payment  of  the  purchase-money;31  one  who  is  in  posses- 
sion under  a  parol  contract  and  who  has  paid  part  of  the  purchase- 
money;32  the  owner  of  an  interest  in  a  vessel  acquired  under  an 
oral  contract  of  purchase  ;33  a  person  holding  possession  under  a  con- 
tract to  purchase  from  the  equitable  owner;34  a  vendor  who  has 
contracted  to  convey;35  a  purchaser  at  an  execution  sale;36  a  per- 
son in  possession  of  real  estate  under  a  bona  fide  claim  of  right  to  the 
ownership  of  the  same;37  one  in  possession  of  the  property  of  an- 
other, to  whom  he  has  advanced  part  of  the  purchase-money,  and 


28  Phoenix    Ins.    Co.    v.    Erie,    etc., 
Trans.  Co.,  117  U.  S.  312   (1885). 

29  Eastern  R.  Co.  v.  Relief  P.  Ins. 
Co.,  105  Mass.  570  (1870);  Perley  v. 
Eastern  R.  Co.,  98  Mass.  414  (1868); 
Chapman  v.   Atlantic,   etc.,   R.   Co., 
37  Me.  92  (1854). 

30  Stirling   v.    Vaughan,    11     East 
619,  629    (1809). 

31  Loventhal  v.  Home  Ins.  Co.,  112 
Ala.  108,  57  Am.  St.  17   (1895);  Im- 
perial F.   Ins.  Co.  v.  Dunham,  117 
Pa.  St.  460  (1888);  Grange  Mill  Co. 
v.  Western  Assur.  Co.,  118  111.  396 
(1886);    Dupreau   v.    Hibernia   Ins. 
Co.,   76   Mich.    615,   5   L.   R.   A.    671 
(1889);    Davidson  v.  Hawkeye  Ins. 
Co.,  71  Iowa  532,   60  Am.  Rep.  818 
(1887);    Smith  v.  Phoenix  Ins.  Co., 
91  Cal.  323,  25  Am.  St.  191   (1891); 
Hartford  F.  Ins.  Co.  v.  Keating,  86 
Md.    130,    63    Am.    St.     499     (1897). 
These  cases  consider  what  is  meant 
by  an  "unconditional  and  sole"  title. 


One  in  possession  claiming  under  a 
deed:  Sanford  v.  Orient  Ins.  Co., 
174  Mass.  416,  75  Am.  St.  358  (1899). 

32  Wainer  v.  Milf  ord  M.  F.  Ins.  Co., 
153  Mass.  335, 11  L.  R.  A.  598  (1890) ; 
Tuckerman    v.    Home    Ins.    Co.,    9 
R.    I.   414     (1870).     In     Oilman    v. 
Dwelling-House  Ins.  Co.,  81  Me.  488 
(1889),   the   conditions   of  the   con- 
tract had  been  broken,  but  no  ad- 
vantage had  been  taken  of  it. 

33  Amsinck  v.  American   Ins.   Co., 
129  Mass.  185   (1880). 

31  Carpenter  v.  German  Amer.  Ins. 
Co.,  135  N.  Y.  298,  31  N.  E.  1015 
(1892). 

35  Wheeling,  etc.,  Ins.  Co.  v.  Mor- 
rison,  11  Leigh    (Va.)    354,   36  Am. 
Dec.  385   (1840). 

36  Curtis  v.  Home  Ins.  Co.,  1  Biss. 
(C.  C.)  485   (1865). 

37  Miller   v.    Alliance    Ins.    Co.,    7 
Fed.  649   (1881). 


§  48 


SUBJECT-MATTER  AXD  INSURABLE  INTEREST. 


46 


from  whom  he  holds  a  power  of  attorney  to  sell  the  property;38  one 
in  possession  of  property  under  an  agreement  to  care  for,  rent  and 
keep  insured;39  contractors  and  builders  in  buildings'  in  process  of 
construction,  for  which  they  are  to  receive  payment  upon  comple- 
tion ;40  the  owner  of  land,  in  buildings  in  the  process  of  construction 
upon  the  land;41  one  who  has  expended  money  upon  another's  prop- 
erty with  the  owner's  consent;42  lien  creditors  in  the  property  to 
which  the  lien  attaches;43  the  holder  of  a  mechanic's  lien;44  the 
mortgagor  and  the  mortgagee  in  the  property  mortgaged;45  a  mort- 


38  Brugger  v.  State  Inv.  Ins.  Co., 
5  Saw.  (C.  C.)  304  (1878). 

38  Cross  v.  National  F.  Ins.  Co., 
132  N.  Y.  133,  30  N.  E.  390  (1892). 
See  Graham  v.  Ins.  Co.,  48  S.  C. 
195,  59  Am.  St.  707  (1896).  A  party 
in  possession,  under  >an  agreement 
with  the  owner  to  pay  for  the  in- 
surance, may,  as  agent,  insure  for 
the  owner's  benefit:  Schaeffer  v. 
Anchor,  etc.,  Ins.  Co.  (Iowa),  85  N. 
W.  985  (1901). 

40  German  Fire  Ins.  Co.  v.  Thomp- 
son, 43  Kan.  567,  23  Pac.  608  (1890). 

41  In  Foley  v.  Manufacturers'  &  B. 
F.  Ins.  Co.,  152  N.  Y.  131,  43  L.  R. 
A.  665   (1897),  it  was  held  that  the 
owner  had  an  insurable  interest  to 
the  extent  of  the  value  of  a  building 
being  erected  upon  his  land,  under 
a  contract  requiring  it  to  be  com- 
pleted within  a  certain  time,  not  yet 
expired,  although  the  loss,  in  the  ab- 
sence of  insurance,  would  fall  on  the 
contractor.     "The  fact  that  the  im- 
provements on  the  land  may  have 
cost  the  owner  nothing,  or  that  if 
destroyed  by  fire  he  may  compel  an- 
other to   replace  them,   or   that  he 
may  recoup  his  loss  by  resort  to  a 
contract  liability  of  a  third  person, 
in  no  way  affects  the  liability  of  the 
insurer,  in  the  absence  of  an  exemp- 
tion in  the  policy."    In  Santa  Clara, 
etc.,  Academy  v.  Northwestern,  etc., 


Ins.  Co.,  98  Wis.  257,  67  Am.  St.  805 
(1898),  the  court  said:  "It  is  well 
settled  that,  in  the  absence  of 
fraud  or  mistake,  unless  otherwise 
provided  in  the  contract  of  insur- 
ance, if  the  insured  has  some  insur- 
able interest  in  the  property  covered 
by  such  contract,  the  whole  amount 
of  damages  to  the  property,  not  ex- 
ceeding that  named  in  the  policy,  is 
recoverable  by  such  person  if  the 
damages  thereto  reach  that  sum,  or 
if,  by  the  contract  itself  and  the 
law  governing  the  subject,  the  face 
value  of  the  policy  must  be  taken 
as  liquidated  damages." 

42Looney    v.    Looney,     116     Mass. 
283   (1874). 

43  Ins.  Co.  v.  Stinson,  103  U.  S.  25 
(1880);    Bell   v.   Western,   etc.,   Ins. 
Co.,  5  Rob.    (La.)   423,  39  Am.  Dec. 
542    (1843);    Longhurst  v.  Star  Ins. 
Co.,  19  Iowa  364  (1865). 

44  Stout  v.  City  F.  Ins.  Co.,  12  Iowa 
371,  79  Am.  Dec.  539   (1861). 

45  Carpenter    v.    Providence,    etc., 
Ins.     Co.,     16     Pet.      (U.     S.)      495 
(1842);  Manson  v.  Phoenix  Ins.  Co., 
64  Wis.  26  (1885);  Traders'  Ins.  Co. 
v.    Robert,    9    Wend.     (N.     Y.)     405 
(1832);  King  v.  State,  etc.,  Ins.  Co., 
7  Gush.   (Mass.)  1,  54  Am.  Dec.  683 
(1851);    Hanover,   etc.,   Ins.   Co.   v. 
Bohn,  48  Neb.  743,  58  Am.  St.  719 
(1896). 


47 


IXSURABLE    INTEREST    IX    PROPERTY. 


48 


gagor,  although  the  mortgage  debt  is  the  full  value  of  the  property  ;4tl 
a  mortgagor  of  personal  property;47  a  husband  in  the  community 
property;48  an  administrator  in  the  property  of  the  estate;49  com- 
mission merchants  in  property  sold,  but  not  removed;50  a  common 
carrier  in  goods  in  his  care;51  a  warehouseman  in  goods  stored  with 
him;52  a  cotton  compress  company  in  cotton  received  to  press;53 
agents,  commission  merchants  and  others  having  the  custody  of  and 
responsibility  for  property;54  the  trustee  and  the  cestui  que  trust  in 
the  trust  property;55  the  assignee  in  insolvency  in  the  assigned 
property;50  the  surety  on  a  distiller's  bond  required  by  the  revenue 
law,  in  whisky  in  store;57  a  partner  in  the  entire  property  of  the 


48  Owner  of  equity  of  redemption: 
Ins.  Co.  v.  Stinson,  103  U.  S.  25 
(1880). 

47  Kronk   v.    Birmingham    F.    Ins. 
Co.,    91    Pa.     St.     300.     As     to     the 
amount  for  which  a  mortgagee  or 
mortgagor  may  insure,  see  Guest  v. 
New  Hampshire  F.  Ins.  Co.,  66  Mich. 
9s   (1887);   French  v.  Rogers,  16  N. 
H.  177    (1844);    Smith  v.  Columbia 
Ins.  Co.,  17  Pa.  St.  253,  55  Am.  Dec. 
546  (1851);  Excelsior  F.  Ins.  Co.  v. 
Royal  Ins.  Co.,  55  N.  Y.  343   (1873). 
Each  of  several  mortgagees  has  an 
insurable  interest  to  the  extent  of 
his  interest:     Fox  v.  Phenix  F.  Ins. 
Co.,  52  Me.  333    (1864).     Where  the 
destruction   of   the   property   would 
leave  the  debt  unpaid,  the  debtor  in 
possession  of  the  pledged  property 
has    an    insurable    interest     to    the 
extent  of  the  value  of  the  property 
which  would  have  gone  to  pay  the 
debt:     Nussbaum    v.    Northern    As- 
sur.  Co.,  37  Fed.  524,  1  L.  R.  A.  706 
(1889). 

48  Hanover  Fire  Ins.  Co.  v.   Shra- 
der,  11  Tex.  Civ.  App.  255,  31  S.  W. 
1100  (1895). 

49  Sheppard  v.  Peabody  Ins.  Co.,  21 
W.  Va.  368    (1883). 

60  One  may  in  his  own  name  in- 
sure the  property  of  another  for  the 


benefit  of  the  owner  without .  his 
previous  authority  or  sanction,  and 
it  will  inure  to  the  benefit  of  the 
owner  upon  the  subsequent  adoption 
of  it,  even  after  a  loss  has  occurred: 
Waring  v.  Indemnity  F.  Ins.  Co.,  45 
N.  Y.  606  (1871). 

51  Phoenix  Ins.  Co.  v.  Erie,  etc., 
Trans.  Co.,  117  U.  S.  312  (1885). 

02  Pelzer  Mfg.  Co.  v.  St.  Paul,  etc., 
Ins.  Co.,  41  Fed.  271  (1890);  Pelzer 
Mfg.  Co.  v.  Sun  Fire  Office,  36  S.  C. 
213,  15  S.  E.  562  (Isyl). 

53  California  Ins.  Co.  v.  Union  Com- 
press Co.,  133  U.  S.  387   (1890). 

54  Waring   v.    Indemnity    Ins.    Co., 
45  N.  Y.  606    (1871);   Western,  etc., 
Pipe   Lines   v.    Home    Ins.    Co.,    145 
Pa.  St.  346,  27  Am.  St.  703    (1891); 
Roberts  v.   Firemen's   Ins.   Co.,   165 
Pa.  St.  55,  44  Am.  St.  642  (1894). 

55  Ex  parte  Houghton,  17  Ves.  Jr. 
251     (1809);     Carpenter    v.     Provi- 
dence, etc.,  Ins.  Co.,  16  Pet.   (U.  S.) 
495    (1842);    Hartford    F.    Ins.    Co. 
v.  Keating,  86  Md.  130,  63  Am.  St. 
499  (1897);  Young  v.  Union  Ins.  Co., 
24  Fed.  279   (1885). 

66Herkimer  y.  Rice,  27  N.  Y.  163 
(1863). 

67  Ins.  Cos.  v.  Thompson,  95  U.  S. 
547  (1877). 


§    48  SUBJECT-MATTER   AND   INSURABLE    INTEREST.  48 

firm;58  a  creditor  in  goods  which  he  has  sold  under  a  contract  by 
which  he  is  to  receive  his  pay  out  of  the  proceeds  of  the  goods  when 
sold  by  the  vendee;59  a  simple  contract  creditor  in  the  specific  prop- 
erty in  the  estate  of  the  deceased  debtor  where  the  estate  may  be  sub- 
jected to  a  proceeding  in  rem  for  the  payment  of  the  debts  and  is  in- 
sufficient for  that  purpose;60  an  attaching  creditor  in  the  property 
attached  or  levied  upon  under  an  execution,  but  such  creditor  must 
insure  his  own  interest,  and  can  not  avail  himself  of  the  debtor's 
insurance;61  a  judgment  creditor  upon  the  property  of  the  debtor 
upon  which  his  judgment  is  a  lien,62  but  a  general  judgment  creditor, 
under  ordinary  circumstances,  has  no  insurable  interest  in  the  specific 
property  of  his  debtor;63  the  owner  in  goods  concealed  from  his 
creditor;6*  the  owner  in  goods  which  have  been  levied  upon  by  his 
creditor  and  sold  under  execution,  so  long  as  the  right  to  redeem 
remains;65  an  insolvent  debtor  in  goods  which  have  passed  to  the 
assignee;66  a  lessor  in  leased  property;67  a  lessee  in  property 
leased;68  a  landlord  in  the  goods  of  his  tenant  which  are  liable  to 
distress;69  an  officer  in  goods  held  by  him  under  an  attachment  or 
levy;70  a  life  tenant  in  the  property  in  his  possession;71  a  re- 
mainder-man in  the  property  in  the  possession  of  the  life  tenant;72 

M  Manhattan  Ins.  Co.  v.  Webster,  **  Imperial  F.  Ins.  Co.  v.  Murray, 

59  Pa.  St.  227   (1868).  73   Pa.   St.   13     (1873).     As    to    the 

68  Roos    v.    Merchants'    Mut.     Ins.  amount  of  the  interest  of  the  les- 

Co.,  27  La.  An.  409  (1875).  see,  see  Home  Ins.  Co.  v.  Gibson,  72 

60 Creed   v.    Sun   Fire    Office,    101  Miss.  58,  17  So.  ^    ^6^4).    A  ten- 
Ala.  522,  23  L.  R.  A.  177  (1893).  ant  who  has  verbally  agreed  to  keep 

81  Donnell  v.  Donnell,  86  Me.  518,  the  property  insured  has  an  insur- 

30  Atl.  67  (1894).  able  interest:     Berry  v.  American, 

o:!Rohrbach  v.  Germania,  etc.,  Ins.  etc.,  Ins.  Co.,  132  N.  \.  49,  28  Am. 

Co.,  62  N.  Y.  47   (1875).  St.  548,  and  note,   (1892). 

""Grevemeyer    v.    Southern,    etc.,  °°  Columbia  Ins.  Co.  v.  Cooper,  50 

Ins.  Co.,  62  Pa.  St.  340,  1  Am.  Rep.  Pa.  St.  331   (1865). 

420   (1869).  » White  v.  Madison,  26  N.  Y.  117 

"Goulstone  v.   Royal   Ins.   Co.,   1  (1862).     The   officer   can   not  effect 

Fost.  &  F.  276  (1858).  insurance  on  property  held  by  him 

65  Cone  v.  Niagara  F.  Ins.  Co.,  60  '  at    the    expense    of    the     parties: 

N.  Y.  619   (1875).  Burke  v.  Brig  M.  P.  Rich,  1  Cliff. 

60  Marks  v.  Hamilton,  16  Jur.  152  (C.  C.)  509   (1860). 

(I852)-  "See   Cross   v.   National    F.   Ins. 

07  Philadelphia  Tool  Co.  v.  British-  Co.,   132   N.   Y.   133,   30    N.   E.    390 

Amer.   Assur.   Co.,   132   Pa.    St.   236  (1892). 

(1890);     Sherwood    v.    Harral,    39  72  Redfield    v.    Holland    Purchase 

Conn.  338  (1872).  Ins.  Co.,  56  N.  Y.  354,  15  Am.  Dec. 

424  (1874). 


49  INSURABLE   INTEREST   IN   PROPERTY.  §    48 

a  tenant  in  common  in  the  property;73  a  husband  in  the  property  in 
which  he  is  a  tenant  by  curtesy  ;74  a  husband  in  the  buildings  on  land 
purchased  and  paid  for  by  him  but  conveyed  to  his  wife,  where  he  has 
in  fact  possession  and  the  beneficial  use  of  the  premises.76  By  the 
weight  of  authority  a  stockholder  in  a  private  corporation  has  an 
insurable  interest  in  the  corporate  property.76 

"Annely  v.  De  Saussure,  26  S.  C.  R.  A.  684  (1890);  Warren  v.  Daven- 

.97   (1886).  port  F.  Ins.  Co.,  31  la.  464,  7  Am. 

"Abbott   v.    Hampden,    etc.,    Ins.  Rep.  160  (1871);  Seaman  v.  Enter- 
Co.,  30  Me.  414  (1849).  prise,   etc.,   Ins.   Co.,   18   Fed.    250 

75Horsch  v.   Dwelling-House   Ins.  (1883).    Contra,  Dictum  in  Philips 

Co.,  77  Wis.  4,  8  L.  R.  A.  806  (1890).  v.  Knox  County  Mut  Ins.  Co.,  20 

"Riggs  v.   Commercial,  etc.,   Ins.  Ohio  174  (1851). 
Co.,  125  N.  Y.  7,  25  N.  E.  1058,  10  L. 


4 — ELLIOTT  INS. 


CHAPTER  IV. 


IXSURABLE    INTEREST    IX    LIVES. 


SEC. 

55.  The  rule  at  common  law. 

56.  The     English     statute — Not    in 

force  in  this  country. 

57.  The  modern  rule. 

58.  The  amount  of  a  creditor's  in- 

surable  interest. 

59.  Mere  form  disregarded. 

60.  Continuance  of  interest  in  life. 

61.  Interest    of    beneficiary    desig- 

nated by  insured. 

62.  Interest  of  the  assignee. 

63.  Interest  of  the  assignee,  contin- 

ued. 


SEC. 

64.  Interest    based    upon    relation- 

ship. 

65.  Interest  based  upon  relationship, 

continued. 

66.  Illustrations  of  insurable  inter- 

est in  life. 

67.  Right  of  assignee  without  inter- 

est to  recover  premiums  paid. 

68.  Want  of  interest  as  a  defense 

under  incontestable  clause. 

69.  Fact  of  insurable  interest  must 

be  pleaded. 

70.  Description  of  interest. 


§  55.  The  rule  at  common  law. — At  common  law  a  contract  of  life 
insurance  was  admittedly  a  wager,  and  hence  required  no  interest  to 
support  it,  but  the  statute  14  Geo.  Ill,  chap.  48,  made  an  interest 
in  the  life  essential.  Some  courts  have  held  that  this  statute  was 
merely  declaratory  of  the  common  law,  but  the  better  opinion  is 
otherwise,  and  it  is  certain  that  many  such  contracts  were  held  valid 
before  the  statute  was  enacted.1  Baron  Parke  says:2  "As  to  insur- 
ance upon  lives,  it  is  perfectly  clear  that  all  contracts  for  wager 
policies,  and  wagers  which  were  not  contrary  to  the  policy  of  the  law, 
were  legal  contracts."  In  some  of  the  early  cases  in  this  country  it 
was  said  that  life  insurance  contracts  do  not  require  an  insurable  in- 
terest in  the  absence  of  a  statute  such  as  had  been  enacted  in  England. 
In  an  early  case  in  Missouri  it  was  held  that  no  interest  was  required  ;3 


1Emerigon  Ins.  159;  Assievedo  v. 
Cambridge,  10  Mod.  77  (1710); 
Depaba  v.  Ludlow,  1  Comyn  361 
(1721);  Dean  v.  Dicker,  2  Strange 
1250  (1746). 

-  Dalby  v.  India,  etc.,  Assur.  Co., 
ID  C.  B.  365  (1854). 


3  Chisholm  v.  National,  etc.,  Ins. 
Co.,  52  Mo.  213,  14  Am.  Rep.  414 
(1873);  but  see  Whitmore  v.  Su- 
preme Lodge,  100  Mo.  36  (1889); 
Trenton,  etc.,  Ins.  Co.  v.  John- 
son, 24  N.  J.  L.  577  (1854).  At 
least  the  interest  need  only  exist 

(50) 


51  INSURABLE  INTEREST  IN  LIVES.  §  56 

and  the  courts  of  New  Jersey  and  Ehode  Island  are  notably  liberal 
in  sustaining  life  insurance  policies,  although  in  Rhode  Island  some 
insurable  interest  is  required.4  Thus,  in  that  state  it  was  recently 
said:  "A  policy  on  another's  life  is  just  as  dangerous  and  tempting 
to  crime  where  there  is  an  interest  as  where  there  is  not."  But  the 
rule  was  early  settled/ as  stated  by  Chancellor  Kent,  that  "a  wager 
contract  is  void  if  it  be  against  the  principles  of  public  policy  equally 
as  if  it  contravened  a  positive  law."5  So,  in  an  early  Pennsylvania 
case,6  it  was  said  that  "a  policy  made  without  interest  is  a  wager 
policy,  and  has  nothing  in  common  with  insurance  but  name  and 
form.  It  is  not  subservient  to  the  true  interest  of  fair  trade  and 
commerce,  but  is  pregnant  with  as  much  mischief,  both  public  and 
private,  as  can  proceed  from  any  species  of  gaming,  which  the  legis- 
lature has  hitherto  found  it  necessary  to  suppress." 

§  56.  The  English  statute — Not  in  force  in  this  country. — In  a  re- 
cent case  in  Wisconsin,  the  court,  after  stating  the  rule  that  an  interest 
in  life  is  required,  said7  that  the  theory  upon  which  the  decisions  are 
based  is  that  such  a  contract  is  nothing  more  than  a  wagering  or 
gambling  contract,  and  hence  is  against  public  policy,  and  therefore 
void.  It  is  very  questionable  whether  such  a  policy  was  void  by  the 
common  law  of  England  prior  to  1774.  In  the  year  named,  the  stat- 
ute of  14  Geo.  Ill,  chap.  48,  was  enacted,  which  is  to  the  effect  that 
thereafter  "no  insurance  shall  be  made  by  any  person  or  persons, 
bodies  politic  or  corporate,  on  the  life  or  lives  of  any  person  or  per- 
sons, or  on  any  other  event  whatsoever,  wherein  the  person  or  persons 
for  whose  use,  benefit,  or  on  whose  account  such  policy  or  policies 

when  the  policy  is  taken  out:    Mow-  to    recover    the    premiums    paid]; 

ry  v.  Home  L.  Ins.  Co.,  9  R.  I.  346  Lord  v.  Ball,  12  Mass.  115,  7  Am. 

(1869).  Dec.  38  (1815)  [sister  in  the  life  of 

*  See   Cronin  v.  Vermont  L.   Ins.  brother.     This  is  the  first  American 

Co.,  20  R.  I.  570  (1898).  life  insurance  case];    Ruse  v.   Mu- 

B  See   the   following   early   cases:  tual  Ben.  L.  Ins.  Co.,  23  N.  Y.  516 

Amory  v.  Oilman,  2  Mass.  1  (1806)  (1861). 

[marine  case  discussing  wager  pol-        °  Pritchet   v.    Ins.     Co.,   3    Yeates 

icies];  Mount  v.  Waite,  7  John.  (N.  (Pa.)  458  (1803). 
Y.)  434  (1811)  [insurance  on  lottery        7Hurd  v.  Doty,  86  Wis.  1,  56  N. 

tickets.     The  contract  was  held  void  W.  371,  21  L.  R.  A.  746  (1893).     As 

as  against  public  policy;  but  as  the  to  what  is  a  wagering  policy,   see 

plaintiff  had  not  violated  any  stat-  Metropolitan  L.  Ins.  Co.  v.  O'Brien, 

ute,  and  was  hence  not  in  pari  de-  92  Mich.  584,  52  N.  W.  1012  (1892). 
licto,  Chancellor  Kent  allowed  him 


§    57  SUBJECT-MATTER   AND   INSURABLE   INTEREST.  52 

shall  be  made,  shall  have  no  interest,  or  by  way  of  gambling  or  wager- 
ing, and  that  every  assurance  made  contrary  to  the  true  intent  and 
meaning  hereof  shall  be  null  and  void,  to  all  intents  and  purposes 
whatsoever*."  The  court  further  said  that  this  statute  was  never 
in  force  in  Wisconsin  and  was  never  received  and  acted  upon  in  this 
country. 

§  57.  The  modern  rule. — It  is  now  the  settled  rule  that  an  interest 
in  the  continuance  of  the  life  of  the  insured  is  necessary  to  support 
a  contract  of  life  insurance.8  The  only  difficulty  is  in  denning  this 
interest.  As  said  by  Mr.  Justice  Field:9  "It  is  not  easy  to  define 
with  precision  what  will  in  all  cases  constitute  an  insurable  interest 
so  as  to  take  the  contract  out  of  the  class  of  wager  policies.  It  may 
be  stated  generally,  however,  to  be  such  an  interest,  arising  from  the 
relations  of  the  party  obtaining  the  insurance,  either  as  creditor  of 
or  surety  for  the  assured,  or  from  the  ties  of  blood  or  marriage  to 
him,  as  will  justify  a  reasonable  expectation  of  advantage  or  benefit 
from  the  continuance  of  his  life.  It  is  not  necessary  that  the  ex- 
pectation of  advantage  or  benefit  should  be  always  capable  of  pecu- 
niary estimation,  for  a  parent  has  an  insurable  interest  in  the  life  of 
his  child,  and  a  child  in  the  life  of  his  parent,  a  husband  in  the  life  of 
his  wife,  and  a  wife  in  the  life  of  her  husband.  The  natural  affec- 
tion in  cases  of  this  kind  is  considered  more  powerful — as  operating 
more  efficaciously — to  protect  the  life  of  the  insured  than  any  other 
consideration.  But  in  all  cases  there  must  be  a  reasonable  ground, 
founded  upon  the  relations  of  the  parties  to  each  other,  either  pecu- 
niary or  of  blood  or  affinity,  to  expect  some  benefit  or  advantage  from 
the  continuance  of  the  life  of  the  assured.  Otherwise,  the  contract 
is  a  mere  wager,  by  which  the  party  taking  the  policy  is  directly  in- 
terested in  the  early  death  of  the  assured.  Such  policies  have  a  ten- 
dency to  create  a  desire  for  the  event.  They  are,  therefore,  inde- 
pendently of  any  statute  on  the  subject,  condemned,  as  being  against 
public  policy." 

•Holmes  v.  Oilman,  138  N.  Y.  369,  preme  Lodge,  100  Mo.  36,  13  S.  W. 

34  Am.  St.  463,  and  notes    (1893);  495    (1889);    Amick  v.   Butler,   111 

Grotty  v.  Union,  etc.,  Ins.  Co.,  144  ind.  578   (1887);   Trinity  College  v. 

U.   S.   621    (1892);    Ulrich  v.   Rein-  Travelers'   Ins.   Co.,   113   N.   C.   244 

oehl,   143   Pa.   St.   238,   22   Atl.   862.  (1893).     See   note   to   57   Am.   Dec. 

(1896)    [involving   the   question   to  93-105. 

what  extent  creditor  may  insure  life  "  Warnock  v.  Davis,  104  U.  S.  775 

of  his   debtor];    Whitmore    v.   Su-  (1881). 


53 


INSURABLE   INTEREST   IN    LIVES. 


58 


§  58.  The  amount  of  a  creditor's  insurable  interest. — In  all  cases 
the  interest  must  be  of  such  a  nature  as  to  take  the  contract  out  of 
the  class  of  wagers.  Hence,  the  amount  of  the  insurance,  where  the 
interest  is  of  a  pecuniary  nature,  must  bear  some  proper  relation  to 
the  value  of  the  interest.10  If  the  amount  which  a  creditor  takes 
upon  the  life  of  his  debtor  is  grossly  disproportionate  as  compared 
with  the  debt,  the  contract  will  be  treated  as  a  wager,  and,  therefore, 
void.11  In  the  jurisdictions  which  permit  the  assignment  of  a  valid 
existing  policy  to  a  person  without  interest,  the  assignee  may  recover 
the  entire  amount  of  the  policy.12  But  in  a  comparatively  recent 
case  in  Pennsylvania13  the  court  laid  down  the  rule  for  determining 
the  amount  of  a  creditor's  insurable  interest  as  follows :  "A  creditor 
may  lawfully  take  out  a  policy  of  insurance  on  the  life  of  his  debtor 
in  an  amount  sufficient  to  cover  the  debt,  with  interest  on  the  cost  of 
such  insurance,  with  interest  thereon  during  the  period  of  the  debtor's 
expectancy  of  life  according  to  the  'Carlisle  tables.  If  such  amount 
be  exceeded  the  policy  may  be  a  wagering  transaction." 

Where  the  policy  is  taken  out  by  the  debtor  or  assigned  as  security 
for  his  creditor,  the  former  paying  the  premium,  the  personal  rep- 


10  Grant  v.  Kline,  115  Pa.  St.  618,  9 
Atl.    150    (1887)    ["creditors,    how- 
ever, hold  only  what  is  necessary 
for  their   indemnity   for  the   debt, 
and  the  representatives  of  the  in- 
sured will  be  entitled  to  the  bal- 
ance"] ;   Metropolitan  L.  Ins.  Co.  v. 
O'Brien,  92  Mich.  584  (1892);   Page 
v.  Burnstine,  102  U.  S.  664   (1880); 
Downey  v.  Hoffer,  110  Pa.  St.  109, 
20    Atl.    655    (1885).     See    note    on 
"Insurable  Interest  in  the  Life  of 
Another,"-  57   Am.   Dec.   93-105.     A 
moral  claim  does  not  constitute  an 
insurable  interest  on  behalf  of  one 
as  a  creditor:     Guardian,  etc.,  Ins. 
Co.   v.    Hogan,    80    111.    35,    22   Am. 
Rep.  180  (1875). 

11  In  Cammock  v.  Lewis,  15  Wall. 
(U.    S.)    643    (1872),    a    policy    for 
$3,000  was  taken  out    to  secure  a 
debt  of  $70  owed  by  L  to  C.     The 
latter  paid   the   premiums   for   one 
year.    L  then  gave  C  his  note  for 
$3,000   without   consideration,   with 


an  agreement  back  that  in  case  of 
the  death  of  L,  C  would  pay  L's 
widow  one-third  of  the  policy.  It 
was  held  that  C  could  retain  only 
the  amount  of  his  debt  with  such 
sums  as  he  had  advanced.  See 
Givens  v.  Veeder,  9  N.  Mex.  256 
(1897). 

12  See  Wright  v.  Mutual,  etc., 
Ass'n,  118  N.  Y.  237,  16  Am.  St.  749 
(1890). 

"Ulrica  v.  Reinoehl,  143  Pa.  St. 
238,  24  Am.  St.  534,  22  Atl.  862 
(1891);  Wheeland  v.  Atwood,  192 
Pa.  St.  237,  73  Am.  St.  803  (1899). 
'See  also  Hays  v.  Lapeyre,  48  La. 
An.  749,  35  L.  R.  A.  647  (1895);  Ex- 
change Bank  v.  Loh,  104  Ga.  446,  44 
L.  R.  A.  372  (1898);  Fisher  v.  Dono- 
van, 57  Neb.  361,  44  L.  R.  A.  383 
(1899);  Roberts  v.  Winton,  100 
Tenn.  484,  41  L.  R.  A.  275  (1898); 
Carson  v.  Vicksburg  Bank,  75  Miss. 
167,  37  L.  R.  A.  559  (1897). 


§    59  SUBJECT-MATTER   AND   INSURABLE   INTEREST.  54 


resentatives  of  the  insured  are  entitled  to  the  balance  after  the  cred- 
itor's debt  is  paid.14 

§  59.  Mere  form  disregarded. — The  courts  will  not  permit  the 
mere  form  of  a  policy  to  cover  and  protect  a  wager  contract.15  Thus, 
where  the  contract  recited  that  the  insured  had  himself  paid  the  first 
premium,  the  insurer  was  allowed  to  show  that  the  premium  was  in 
fact  paid  by  the  beneficiary,  who  had  no  insurable  interest.16  So 
where  it  appeared  that  the  person  insured  was  only  a  nominal  party 
to  the  contract,  and  that  the  beneficiary  named  in  the  policy  had  in 
reality  procured  the  insurance  and  paid  the  premiums,  it  was  held 
that,  "in  order  that  the  transaction  may  be  taken  out  of  the  cate- 
gory of  wager  contracts,  the  beneficiary  must  have  had  an  insurable 
interest  of  a  pecuniary  character,  or  of  that  nature,  either  present  or 
prospective,  at  the  time  the  policy  had  its  inception/'17  The  essential 
thing  is  that  the  policy  shall  be  obtained  in  good  faith,  and  not  for 
the  purpose  of  speculating  upon  the  hazard  of  a  life  in  which  the  in- 
surer has  no  interest.18 

The  manner  of  the  payment  of  the  premium  is  of  much  importance 
in  determining  whether  the  policy  is  speculative,  and  the  tendency  is 
to  condemn  contracts  where  the  premium  is  paid  by  the  beneficiary 
who  has  no  insurable  interest,  although  the  policy  was  taken  out  by 
the  insured.  Thus,  a  policy  was  held  invalid,  although  the  insured 
himself  made  the  application,  where  it  appeared  that  the  beneficiary 
paid  the  premiums.19 

"Morris    v.    Georgia    Loan,    etc.,  gan,    80    111.    35,    22    Am.    Rep.    180 

Ass'n,  109  Ga.  12,  46  L.  R.  A.  506  (1875);      Whitmore      v.      Supreme 

(1899),  and  note;  Amick  v.  Butler,  Lodge,  100  Mo.  36  (1889). 

Ill   Ind.   578    (1887).     See   Hale   v.  10  United    Brethren,    etc.,    Soc.    v. 

Life  Indem.,  etc.,  Co.,  65  Minn.  548  McDonald,  122  Pa.  St.  324,  1  L.  R.  A. 

(1897).     In  Rittler  v.  Smith,  70  Md.  238  (1888). 

261,  2  L.  R.  A.  844    (1889),  it  was  "Amick  v.  Butler,  111  Ind.  578,  60 

held  that  a  creditor  could  insure  the  Am.  Rep.  722   (1887). 

life   of  his   debtor  and   collect   the  "Connecticut    M.    L..  Ins.    Co.    v. 

amount,  although  his  debt  had  been  Schaefer,  94  U.  S.  457  (1876). 

paid  before  the  death  of  the  debtor;  19  Trinity  College  v.  Travelers'  Ins. 

but  the  relation   between  the   debt  Co.,  113  N.  C.  244,  22  L.  R.  A.  291 

and  the  policy  must  not  be  grossly  (1893).     See  Burton  v.  Connecticut 

disproportionate.     As    to    who    are  M.  L.  Ins.  Co.,  119  Ind.  207  (1889); 

legal     representatives     within     the  Rawls  v.  American  M.  L.  Ins.  Co., 

meaning  of  a  life  insurance  policy,  27  N.  Y.  282,  84  Am.  Dec.  280  (1863); 

see   note   to   Rose   v.   Wortham,   95  Burke   v.    Prudential   Ins.    Co.,   155 

Tenn.  505,  30  L.  R.  A.  609.  Pa.  St.  295   (1893). 

u  Guardian,   etc.,   Ins.   Co.   v.   Ho- 


55  INSURABLE  INTEREST  IN  LIVES.  §  60 

§  60.  Continuance  of  interest  in  life. — We  have  found  that  life 
insurance  is  not  a  contract  of  indemnity  and  that  the  requirement  of 
interest  is  necessary  merely  to  prevent  condemnation  by  the  statute 
or  common-law  rule  against  wager  contracts.  In  fire  and  marine  in- 
surance contracts  the  insured  is  indemnified  for  the  loss  of  interest 
existing  at  the  time  of  the  loss.  But  in  life  insurance  it  is  only 
necessary  that  an  interest  exist  at  the  time  the  contract  is  made.  It 
seems  to  be  the  prevailing  rule  that  if  the  contract  is  originally  valid 
it  is  not  affected  by  the  loss  of  interest  unless  such  is  the  necessary 
result  of  the  provisions  of  the  policy.20  Thus,  where  a  married  woman 
is  named  as  the  beneficiary  in  an  ordinary  policy  of  insurance  on  the 
life  of  her  husband,  the  policy  remains  in  force  although  she  obtains 
a  divorce  before  his  death.21  But  where  the  insurance  is  in  a  mutual 
benefit  association,  the  relation  of  husband  and  wife  must,  by  the 
ordinary  terms  of  the  contract,  exist  at  the  time  of  the  death.22  There 
is,  however,  a  line  of  cases  which  holds  that  the  assignee  of  a  life  in- 
surance policy  must  have  an  insurable  interest  notwithstanding  the 
fact  that  it  was  valid  when  issued.23  It  is  said  by  the  supreme  court 
of  the  United  States  that  "if  the  policy  of  insurance  be  taken  out  by 
a  debtor  on  his  own  life,  naming  a  creditor  as  beneficiary,  or  with  a 
subsequent  assignment  to  a  creditor,  the  general  doctrine  is  that  on 
payment  of  the  debt  the  creditor  loses  all  interest  therein,  and  the 
policy  becomes  one  for  the  benefit  of  the  insured  and  collectible  by  his 
executors  or  administrators."24 

10  Ins.  Co.  v.  Bailey,  13  Wall.  (U.  the  policy.    But  this  case  was  over- 

S.)    616    (1871);    Connecticut  M.  L.  ruled:     Mowry  v.  Home  L,.  Ins.  Co., 

Ins.  Co.  v.   Schaefer,   94  U.   S.   457  9  R.  I.  346  (1869);  Loomis  v.  Eagle, 

(1876);    Sides  v.  Knickerbocker  L.  etc.,   Ins.   Co.,   6   Gray    (Mass.)    396 

Ins.  Co.,  16  Fed.  650  (1883);  Appeal  (1856);    Rawls  v.   American   M.   L,. 

of  Corson,  113  Pa.  St.  438,  6  Atl.  213  Ins.  Co.,  27  N.  Y.  282  (1863). 

(1886);    Scott  v.   Dickson,   108   Pa.  21  Connecticut,    etc.,     Ins.    Co.    v. 

St.   6    (1884);    Rittler  v.   Smith,  70  Schaefer,  94  U.  S.  457  (1876);  Over- 

Md.  261   (1889)   [creditor  after  pay-  hiser  v.  Overhiser,  63  Ohio  St.  77, 

ment    of    debt].      The    well-known  50  L.  R.  A.  552  (1890),  annotated, 

case  of  Godsall  v.  Boldero,  9  East  22  Tyler  v.  Odd  Fellows',  etc.,  Ass'n, 

72   (1807),  grew  out  of  a  policy  is-  145  Mass.  134   (1887);   Schonfield  v. 

sued  on  the  life  of  England's  great  Turner,  75  Tex.  324,  7  L.  R.  A.  189 

prime  minister,  William  Pitt,  taken  (1889). 

out    by    a     creditor.     After    Pitt's .  -J  See  §  62,  infra. 

death  his   debts  were  paid   by  the  24  Grotty  v.   Union,   etc.,   Ins.   Co., 

nation,  and  it  was  held  that  as  life  144  U.  S.   621    (1892).     In  Manhat- 

insurance  was  a  contract  of  indem-  tan  L.  Ins.  Co.  v.     Hennessy,  39  C. 

nity  there  could  be  no  recovery  on  C.  A.  625,  it  was  said  that  this  case 


§    61  SUBJECT-MATTER  AND   INSUEABLE   INTEREST.  56 

§  61.  Interest  of  beneficiary  designated  by  insured. — Wager  pol- 
icies are  held  void  because  it  is  thought  contrary  to  public  policy 
"that  one  person  should  have  an  expectation  of  a  benefit  conditioned 
upon  the  happening  of  the  death  of  another."  It  is  therefore  thought 
necessary  that  the  temptation  to  destroy  the  life  of  the  other  in  order 
to  obtain  such  benefit  must  be  balanced  or  counteracted  by  an  insur- 
able  interest  in  the  life.  A  person  has  an  insurable  interest  in  his 
own  life,  and  the  rule  is  assumed  to  have  no  application  where  the 
original  contract  is  made  by  the  insured.  We  therefore  find  the  rule 
that  one  who  takes  an  insurance  upon  his  own  life  and  pays  the  pre- 
miums may  make  the  insurance  payable  to  any  person  he  may  name 
in  the  policy,  and  that  such  person  need  have  no  interest  in  the  life 
of  the  insured.25 

As  said  in  South  Carolina,26  "It  is  firmly  established  that  insurance 
procured  by  one  person  on  the  life  of  another  in  which  the  party 
effecting  the  insurance  has  no  interest  is  void  as  a  wager  contract, 
against  public  policy  which  condemns  gambling  speculations  upon 
human  life.  But  it  is  also  well  settled  that  a  person  may  insure  his 
own  life  and  make  the  policy  payable  to  whomsoever  he  chooses,  even 
a  beneficiary  who  has  no  insurable  interest  in  his  life,  provided  that 

is  not  in  its  results  in  conflict  with  (1887);  Mutual  L.  Ins.  Co.  v.  Allen, 

the     previous     statements     of     the  138   Mass.    24,    52    Am.    Rep.    848 

court;  that  it  is  not  necessary  that  (1884);  Fitzgerald  v.  Hartford,  etc., 

the  interest  continue  to  the  time  of  Ins.   Co.,   56   Conn.   116,   7  Am.   St. 

the  death.  288     (1888);    Eckel    v.    Renner,    41 

*  Albert  v.  Mutual  L.  Ins.  Co.,  122  Ohio  St.   232    (1884).     Contra,  Mis- 

N.  C.  92,  30  S.  E.  327,  65  Am.  St.  souri  Valley  L.  Ins.  Co.  v.  Sturges, 

693    (1898);    Union,  etc.,  League  v.  18  Kan.  93,  26  Am.  Rep.  761  (1877); 

Walton,  109  Ga.  1,  52  L.  R.  A.  442  Helmetag  v.  Miller,  76  Ala.  183,  52 

(1899);  Olmsted  v.  Keyes,  85  N.  Y.  Am.    Rep.    316     (1884);     Roller    v. 

593    (1881);    Sabin  v.  Phinney,  134  Moore,  86  Va.  512,  6  L.  R.  A.  136 

N.  Y.  423  (1892);  Vivar  v.  Supreme  (1889);  Basye  v.  Adams,  81  Ky.  368 

Lodge,  52  N.  J.  L.  455,  20  Atl.   36  (18*d).     See   note    to    16     Am.     St. 

(1890);   Northwestern  Masonic  Aid  906.     A  mere  friend  has  not  an  in- 

Ass'n  v.  Jones,  154  Pa.   St.   99,   35  surable  interest,  and  can  not  be  the 

Am.  St.  810  (1893);  Martin  v.  Stub-  beneficiary  of  a  life  insurance  pol- 

bings,  126   111.   387,   9  Am.   St.   620  icy,    although   the     insured     volun- 

(1889);  Heinlein  v.  Imperial  L.  Ins.  tarily   makes   it  payable    to    him: 

Co.,  101  Mich.  250,  45  Am.  St.  409,  25  Caudell  v.   Woodward,   96  Ky.   646, 

L.  R.  A.  627  (1894);  Clark  v.  Allen,  29  S.  W.  614  (1895). 
11  R.  I.  439,  23  Am.  Rep.  496  (1878) ;         »  Crosswell  v.  Connecticut  Indem- 

Amick  v.  Butler,   111   Ind.   578,   60  nity  Ass'n,  51   S.  C.  103,  28  S.  E. 

Am.   Rep.   723    (1887);    Murphy   v.  200  (1897). 
Red,  64  Miss.  614,  60  Am.  Rep.  68 


57  INSURABLE  INTEREST  IN  LIVES.  §  62 

the  transaction  is  bona  fide  and  not  a  mere  cover  to  evade  the  law 
against  wager  policies.  In  such  a  case  the  interest  which  the  insured 
has  in  his  own  life  supports  the  policy  and  prevents  it  from  being 
condemned  as  a  wager  contract."  So,  in  Georgia  it  was  said:27 
"Beyond  all  controversy  a  man  has  an  insurable  interest  in  his  own 
life,  and  we  fail  to  see  when,  having  that  interest,  he  entered  into  a 
contract  with  an  insurer  by  which,  for  a  stipulated  sum,  which  he 
periodically  pays,  the  insurer  becomes  liable  to  pay  a  given  sum  of 
money  at  the  death  of  the  insured,  why  he  who  is  most  interested, 
whether  actuated  by  ties  of  relationship,  motives  of  friendship, 
gratitude,  sympathy  or  love,  may  not  make  the  object  of  his  consid- 
eration the  recipient  of  his  bounty.  If  it  be  replied  that  a  temptation 
is  extended  to  the  beneficiary  by  improper  means  to  hasten  the  time 
when  he  should  receive  the  amount  of  the  policy — and  it  is  for  this 
reason  that  such  contracts  will  only  be  upheld  when  the  idea  of 
temptation  is  rebutted  by  the  natural  ties  of  blood  or  affinity — we 
might  well  ask  ourselves  why  executory  devises,  bequests,  provisions 
for  support  and  maintenance  provided  for  friends  and  even  strangers, 
are  not  subject  to  the  same  inhibition  as  being  against  public  policy. 
But  while,  as  we  have  before  said,  many  adjudicated  cases,  frequently 
contrary  to  natural  justice,  clearly  hold  that,  unless  the  beneficiary 
or  assignee  has  an  insurable  interest  in  the  life  of  the  insured,  the 
policy  or  assignment  is  void,  we  shall  undertake  to  show  by  authority 
that  such  is  not  the  law/'  In  nearly  all  the  cases  in  which  this  rule 
has  been  applied  the  insured  paid  the  premiums,  but  it  has  been  held 
to  apply  even  where  the  premiums  were  paid  by  the  beneficiary.27a 

§  62.  Interest  of  the  assignee. — The  question  whether  a  policy 
valid  at  its  inception  may  afterwards,  before  the  death  of  the  insured, 
be  assigned  to  one  who  has  no  insurable  interest  in  the  life  of  the  in- 
sured, has  been  much  discussed,  and  the  authorities  are  in  hopeless 
conflict.28  It  is  universally  admitted  that  wager  policies  are  void, 
and  that  it  is  necessary  to  show  that  the  contract  is  supported  by  an 
interest  of  some  character  sufficient  to  remove  the  objection  that  on 
grounds  of  public  policy  it  is  not  well  that  it  should  be  to  the  finan- 
cial interest  of  A  that  B  should  cease  to  live.  If  no  interest  appears 

27  Union  Fraternal  League  v.  Wai-  28  See  notes  to  Morrell  v.  Trenton 

ton,  109  Ga.  1,  46  L.  R.  A.  424  (1899).  Ins.  Co.,  57  Am.  Dec.  103,  and  Cur- 

27a  Fidelity,  etc.,  Ass'n  v.  Jeffords,  rier  v.  Continental  L.   Ins.  Co.,  52 

107  Fed.  402,  46  C.  C.  A.  377  (1901),  Am.  Rep.  143. 
and  cases  cited. 


§    62  SUBJECT-MATTER  AND   INSURABLE    INTEREST.  58 

the  law  will  presume  that  the  policy  was  taken  out  for  a  speculative 
purpose.29  In  ordinary  property  insurance  the  principle  of  indem- 
nity makes  the  question  easy  of  solution,  but  this  does  not  apply  to  life 
insurance.  There  it  must  appear  that  the  beneficiary  has  an  interest 
in  the  continuance  of  the  life  resulting  from  some  relation  of  con- 
tract, affinity,  consanguinity  or  dependence  supported  by  a  moral  ob- 
ligation, or  a  reasonable  expectation  of  benefit.  Thus,  if  it  appears 
that  the  beneficiary  has  such  an  interest  as  to  remove  the  suspicion 
that  the  contract  is  a  gambling  or  speculative  transaction,  the  courts 
will  not,  as  a  general  rule,  investigate  very  carefully  into  the  exact 
nature  or  value  of  the  interest.  Some  courts  are  less  liberal  than 
others.  Thus,  it  is  held  that  the  interest  that  exists  when  the  con- 
tract is  made  must  continue  to  the  death  of  the  insured,  or,  at  least, 
must  exist  at  that  time,  and  that  the  assignee  of  a  valid  policy  must 
also  have  an  insurable  interest  in  the  life  of  the  insured.  It  must 
be  admitted  that  this  doctrine  is  strictly  logical  and  in  accord  with 
the  reason  of  the  rule  which  requires  the  existence  of  an  interest.  As 
said  by  Mr.  Justice  Field:30  "If  there  be  any  sound  reason  for 
holding  a  policy  invalid  when  taken  out  by  a  party  who  has  no  interest 
in  the  life  of  the  assured,  it  is  difficult  to  see  why  that  interest  is  not 
as  cogent  and  operative  against  a  party  taking  out  an  assignment  of 
a  policy  upon  the  life  of  a  person  in  which  he  has  no  interest. 
The  same  ground  which  invalidates  the  one  should  invalidate 
the  other — so  far  at  least  as  to  restrict  the  right  of  the  assignee 
to  the  sums  actually  advanced  by  him."  This  rule  prevails  in 
Alabama,31  Kansas,32  Kentucky,33  North  Carolina,3*  Pennsylvania,35 

0  United  Brethren  Mut.  Aid  Soc.  (1887);  Missouri  Valley  L.  Ins.  Co. 

v.  McDonald,  122  Pa.  St.  324  (1888).  v.  Sturges,  18  Kan.  93,  26  Am.  Rep. 

"Warnock  v.  Davis,  104  U.  S.  775  761   (1877). 

(1881).     That  this  is  still  the  doc-         ^Basye    v.    Adams,    81     Ky.     368 

trine  of  the  supreme  court,  see  Man-  (1883).  An  assignment  is  valid  only 

hattan  L.  Ins.  Co.  v.  Hennessy,  39  in  so  far  as  necessary  to  secure  ad- 

C.  C.  A.  625,  99  Fed.  64  (1900).  vances     made     by     the     assignee: 

31Stoelker   v.    Thornton,    88     Ala.  Beard  v.  Sharp,  100  Ky.  606,  38  S. 

241,   6   So.   680    (1889).     The   dispo-  W.  1057   (1897). 
sitlon  may  be  made  by  will:     Ala-        **  Powell  v.  Dewey,  123  N.  C.  103, 

bama  G.  L.  Ins.  Co.  v.  Mobile  Mut.  31  S.  E.  381  (1898). 
Ins.    Co.,    81    Ala.    329,    1     So.     561         M  Hoffman    v.    Hoke,    122    Pa.    St. 

(1886);   Helmetag  v.  Miller,  76  Ala.  377,  15  Atl.  437    (1883).     The    orig- 

183  (1884).  inal    beneficiary    who    assigned    to 

"Missouri   Valley   L.   Ins.   Co.   v.  one   without   interest   can   recover: 

McCrum,  36  Kan.  146,  12  Pac.  517  Carpenter  v.  U.  S.  Life  Ins.  Co.,  161 


59  IXSURABLE    INTEREST   IN    LIVES.  §    63 

Texas/6  Tennessee,37  and  the  United  States  courts.38  It  is  not,  how- 
ever, always  followed  to  its  logical  conclusion,  as  all  the  reasons  which 
forbid  the  assignment  of  a  policy  to  a  person  without  interest  apply 
where  there  is  a  loss  of  interest.  But  an  assignee  without  interest  will 
be  protected  to  the  extent  of  the  money  advanced  by  him  for  the  pay- 
ment of  premiums.39  It  is  held  in  Texas  that  the  beneficiary  named 
in  the  policy,  who  has  no  interest^  will  hold  the  proceeds  of  the  policy 
as  trustee  for  the  legal  representatives  of  the  insured,  and  that  the 
assignee  without  interest  will  only  hold  it  to  the  extent  of  his  debt.40 
Mere  want  of  interest  in  the  assignee  of  a  valid  policy  does  not  in  this 
jurisdiction  invalidate  the  policy.  The  insurer  must  perform  his 
contract  and  leave  it  to  the  court  to  determine  to  whom  the  money 
belongs.41 

§  63.  Interest  of  the  assignee,  continued. — The  tendency  in  busi- 
ness life  has  been  to  liberalize  the  rules  governing  life  insurance  and 
thus  to  broaden  its  scope.  It  was  found  desirable  that  life  insurance 
policies  should  pass  freely  by  transfer  and  assignment,  and  so  long 
as  this  was  with  the  consent  of  the  parties  it  was  felt  that  the  objec- 
tions on  the  ground  of  public  policy  were  largely  illusory.  Thus  a 
more  liberal  rule  has  been  adopted  in  many  states,  where  it  is  held 

Pa.  St.  9,  32  L.  R.  A.  571    (1894);  Co.,    101    Tenn.    22,    46    S.    W.    561 

Keystone  Mut.  Ben.  Ass'n  v.  Norris,  (1898)    [notwithstanding   incontest- 

115  Pa.  St.  446,  8  Atl.  638    (1886).  able  clause]. 

A  took  out  a  policy  on  her  life  and  as  Connecticut,    etc.,     Ins.     Co.     v. 

assigned    it   to    her   husband,    who,  Schaefer,  94  U.  S.  457   (1876.)     See 

being  subsequently   unable   to    pay  New  York,   etc.,   Ins.   Co.    v.    Arm- 

the  premiums,  assigned  it  absolutely  strong,  117  U.  S.  591    (1886);   Cur- 

to  C  to  pay  a  debt,  which,  had  A  rier  v.   Continental  L.  Ins.  Co.,   52 

lived  out  her  life  expectancy,  would  Am.  Rep.  134  (1885),  annotated, 

have  amounted  to  about  the  amount  39  Page    v.    Burnstine,    102    U.     S. 

of  the  policy.     This  was  held  not  a  664   (1880);   Warnock  v.  Davis,  104 

wagering  policy:     Wheeland  v.  At-  U.  S.  775  (1881).     See  §  67,  infra. 

wood,  192  Pa.  St.  237,  43  Atl.  946,  4UThe  policy  is  valid  and  collect- 

73  Am.  St.  803  (1899).  ible;  but  the  proceeds  go  to  the  par- 

^Schonfield   v.   Turner,    75    Tex.  ties  legally  entitled  thereto:     Equi- 

324,  12  S.  W.  626   (1889);   Price  v.  table  Life  Ins.  Co.  v.  Hazlewood,  75 

Supreme     Lodge,     68     Texas     361  Tex.    338,    16   Am.   St.   893    (1889); 

(1887).     The  policy  in  such  case  is  Schonfield  v.  Turner,  75  Tex.  324,  7 

for  the  benefit  of  the  original  bene-  L.  R.  A.  189  (1889). 

flciary.  41  Cheeves  v.  Anders,  87  Tex.  287, 

"Clement   v.   New   York    L.    Ins.  47  Am.  St.  107  (1894). 


§  63 


SUBJECT-MATTER   AND   INSURABLE    INTEREST. 


60 


that  a  policy  supported  by  an  interest  at  its  inception  is  a  mere  chose 
in  action,  which  may  be  assigned  to  a  person  who  has  no  insurable 
interest  in  the  life.42  Such  an  assignment  does  not  create  a  new 
contract,  but  merely  continues  the  old  contract  in  force.  A  person 
may  thus  insure  his  own  life  and  either  name  or  assign  the  policy 
to  whomsoever  he  chooses  without  reference  to  the  interest  of  such 
beneficiary  in  his  life.  The  rule  that  the  assignee  of  a  valid  policy 
need  not  have  an  insurable  interest  in  the  life  prevails  in  California,43 
Colorado,44  Georgia,45  Illinois,46  Indiana,47  Maryland,48  Massachu- 
setts/9 Mississippi,50  New  York,51  Ohio,52  Ehode  Island,53  Ver- 


42  See  notes  to  26  Am.  St.  23;  also, 
Hogue  v.  Minnesota  Pack.,  etc.,  Co., 
59  Minn.  39  (1894). 

43  Deering's  Civil  Code  Cal.,  §  2764. 
See  Curtiss  v.  JEtna,  etc.,  Ins.  Co., 
90  Cal.  245,  25  Am.  St.  114  (1891). 

"Sheets  v.  Sheets,  4  Colo.  App. 
450,  36  Pac.  310  (1894). 

"  Union  Fraternal  League  v.  Wal- 
ton, 109  Ga.  1,  46  L.  R.  A.  424  (1899). 

"Martin  v.  Stubbings,  126  111. 
387,  9  Am.  St.  625  (1888);  Bloom- 
ington  Mut.  B.  Ass'n  v.  Blue,  120 
111.  121,  60  Am.  Rep.  558,  11  N.  B. 
331  (1887). 

47  State  v.  Tomlinson,  16  Ind.  App. 
662,  59  Am.  St.  335  (1897);  Amick 
v.  Butler,  111  Ind.  578  (1887).  In 
Prudential  Ins.  Co.  v.  Hunn,  21  Ind. 
App.  525,  52  N.  E.  772  (1899),  it  was 
held  that  a  policy  issued  to  one 
upon  the  life  of  another  who  has 
no  insurable  interest,  is  a  wagering 
contract  and  void.  In  Franklin  L. 
Ins.  Co.  v.  Hazzard,  41  Ind.  116,  13 
Am.  Rep.  313  (1872),  the  court  said: 
"In  our  opinion,  no  one  should  hold 
a  policy  upon  the  life  of  another,  in 
whose  life  he  has  no  insurable  in- 
terest at  the  time  he  acquired  the 
policy,  whether  the  policy  be  issued 
to  him  directly  from  the  insurer  or 


whether  he  acquire  the  policy  by 
purchase  and  assignment  from  an- 
other." In  Continental  L.  Ins.  Co. 
v.  Volger,  89  Ind.  572  (1883),  it  was 
held  that  the  interest  must  be  a  pe- 
cuniary one,  and  hence  a  mother 
had  not  an  insurable  interest  in  the 
life  of  her  son. 

**  Souder  v.  Home,  etc.,  Soc.,  72 
Md.  511,  20  Atl.  137  (1890).  See 
Clogg  v.  McDaniel,  89  Md.  416,  43 
Atl.  795  (1899). 

48  Dixon  v.  National  L..  Ins.  Co., 
168  Mass.  48,  46  N.  B.  430  (1897); 
Mutual  L.  Ins.  Co.  v.  Allen,  138 
Mass.  31  (1884). 

80  Murphy  v.  Red,  64  Miss.  614,  1 
So.  761  (1887). 

"Olmsted  v.  Keyes,  85  N.  Y.  593 
(1881);  Valton  v.  National  F.  L. 
Ass'n,  20  N.  Y.  32  (1859);  Rawls  v. 
American  M.  L.  Ins.  Co.,  27  N.  Y. 
282  (1863);  St.  John  v.  American 
M.  L.  Ins.  Co.,  13  N.  Y.  31,  64  Am. 
Dec.  529;  Sabin  v.  Phinney,  134  N. 
Y.  423  (1892)  [mutual  benefit  so- 
ciety certificate]. 

"Eckel  v.  Renner,  41  Ohio  St:  232 
(1884). 

"Clark  v.  Allen,  11  R.  I.  439; 
Cronin  v.  Vermont  L.  Ins.  Co.,  20  R. 
I.  570,  40  Atl.  497  (1898). 


61  INCURABLE   INTEREST    IN    LIVES.  §    64 

mont,54  Wisconsin,63  South  Carolina,56  and  in  England57  and  Can- 
ada.58 

This  doctrine  seems  to  be  supported  by  the  weight  of  authority, 
but  it  must  be  noted  that  under  either  rule  the  essential  fact  is  that 
the  transaction  must  be  bona  fide,  and  not  a  mere  cover  for  a  wager- 
ing or  speculative  insurance  or  a  device  to  evade  the  law.  In  fact, 
many  of  the  cases  which  hold  an  assignment  without  interest  void 
will,  upon  close  examination,  be  found  to  rest  upon  the  fact  that  the 
transaction  in  question  was  merely  colorable  and  an  attempt  to  obtain 
speculative  insurance.59 

§  64.  Interest  based  upon  relationship. — Where  no  ties  of  blood 
or  marriage  exist,  a  person  has  an  insurable  interest  in  a  life  only 
when  he  is  a  creditor  of,  or  surety  for  such  party.  Where  there  are 
ties  of  blood  or  marriage  there  must  be  a  reasonable  expectation  of  ad- 
vantage from  the  continuance  of  the  life.  There  is  some  conflict 
among  the  decisions  as  to  the  nature  of  the  interest  which  grows  out 
of  the  relationship  which  will  support  a  policy  of  insurance.  Where  it 
is  pecuniary,  and  the  amount  of  the  insurance  bears  some  reasonable 
proportion  to  the  interest,  the  contract  is,  of  course,  not  a  wager 
policy.  If  the  reason  for  requiring  an  interest  be  as  stated  in  many 
cases,  that  it  is  against  public  policy  to  tempt  one  person  to  deprive 
another  of  his  life,  it  is  apparent  that  certain  ties  of  relationship  are 
an  ample  protection.  Hence,  we  find  some  decisions,  and  in  our 
opinion  the  better  ones,  holding  that  near  relationship,  without  any 
element  of  dependence,  creates  an  insurable  interest.  A  father 
has  no  direct  pecuniary  interest  in  the  continuance  of  the  life  of  a 
demented  or  crippled  son,  but  it  is  little  less  than  nonsense  to  say  that 
public  policy  forbids  such  a  father  to  insure  the  life  of  his  child  be- 
cause of  the  danger  that  he  will  be  tempted  to  take  the  life  of  the 
child.  The  common-sense  rule  is  that  there  is  an  insurable  interest 
sufficient  to  prevent  the  policy  being  a  speculative  contract  where  there 
is  either  a  pecuniary  interest,  the  relation  of  dependency,  or  any  re- 

54  Fair-child  v.  Northeastern  M.  L.  Ass'n,   51    S.   C.   103,   28   S.   E.   200 

Ass'n,  51  Vt.  613  (1879).  (1897). 

85  Strike    v.    Wisconsin,    etc.,    Ins.  "  Ashley    v.    Ashley,    3    Sim.    149 

Co.,    95    Wis.    583,    70    N.    W.    819  (1829). 

(1897);   Bursinger  v.  Bank,  etc.,  67  M  North  American  L.  Assur.  Co.  v. 

Wis.   75,   58  Am.   Rep.   848    (1886);  Craigen,  13  Can.  S.  C.  278  (1886). 

Hurd  v.  Doty,  86  Wis.  1,  21  L.  R.  A.  »  See  Clark  v.  Allen,  11  R.  I.  439, 

746  (1893).  23  Am.  Rep.  496   (1877). 

84  Crosswell    v.    Connecticut    Ind. 


§    64  SUBJECT-MATTER   AND   INSURABLE    INTEREST.  62 

lationship  from  which  ordinary  observation  teaches  that  there  is  no 
real  danger  of  placing  temptation  in  the  way  of  the  beneficiary.  All 
statements  of  this  character  must,  however,  be  taken  subject  to  the 
rule  that  where  it  is  apparent  that  the  transaction  is  merely  a  cover 
for  a  wager  it  will  not  be  sustained  by  the  courts.60 

In  one  case  the  supreme  court  of  the  United  States,  which  is  very 
strict  in  requiring  an  insurable  interest,  said  :61  "The  better  opinion 
is  that  the  decided  cases  which  proceed  upon  the  ground  that  the  in- 
sured must  necessarily  have  some  pecuniary  interest  in  the  life  of  the 
cestui  que  vie  are  founded  upon  -an  erroneous  view  of  the  nature  of 
the  contract,  that  the  contract  of  life  insurance  is  not  necessarily  one 
merely  of  indemnity  for  a  pecuniary  loss,  as  in  marine  or  fire  policies, 
that  it  is  sufficient  to  show  that  the  policy  is  not  invalid  as  a  wager 
policy,  if  it  appears  that  the  relation,  whether  of  affinity  or  con- 
sanguinity, was  such  between  the  person  whose  life  was  insured  and 
the  beneficiary  named  in  the  policy,  as  warrants  the  conclusion  that 
the  beneficiary  had  an  interest,  whether  pecuniary  or  arising  from 
dependence  or  mutual  affection,  in  the  life  of  the  person  insured." 

Mr.  Joyce  says:62  "The  general  rule,  as  deduced  from  a  majority 
of  the  cases,  would  seem  to  be,  however,  that  the  interest  must  rest 
iipon  a  purely  pecuniary  basis,  or,  in  case  of  consanguinity  or  affinity, 
there  is  a  sufficient  interest  where  they  involve  a  reasonable  claim  to 
support  or  some  benefit  or  advantage  to  be  derived  from  the  continu- 
ance of  the  life  insured."  A  much  narrower  view  is  adopted  in  many 
cases.  Thus,  in  North  Carolina  it  was  said:63  "Except  in  a  case 
where  there  are  ties  of  blood  or  marriage,  the  expectation  of  advan- 
tage from  the  continuance  of  the  life  insured,  in  order  to  be  reason- 
able, as  the  law  counts  reasonableness,  must  be  founded  in  the  exist- 
ence of  some  contract  between  the  person  whose  life  is  insured  and  the 
beneficiary,  the  fulfillment  of  which  the  death  will  prevent;  it  must 
appear  that  by  the  death  there  may  come  damage  which  can  be  esti- 
mated under  some  rule  of  law,  for  which  loss  or  damage  the  insurance 
company  has  undertaken  to  indemnify  the  beneficiary  under  its  pol- 

00  That   insurable   interest   is   not        °2  Joyce    Ins.,    §    899.    See    United 

confined  to  any  particular  class  of  Brethren,  etc.,  Soc.  v.  McDonald,  122 

persons  or  relationship,    see    Ken-  Pa.  St.  324,  1  L.  R.  A.  238  (1888). 
tucky,  etc.,  Ins.  Co.  v.  Hamilton,  63        Uj  Trinity    College     v.     Travelers' 

Fed.  93,  11  C.  C.  A.  42. (1894).  Ins.  Co.,  113  N.  C.  244,  18  S.  E.  175 

"Ins.  Co.  v.  Bailey,  13  Wall.   (U.  (1893). 
S.)  616  (1871). 


63  IXSURABLE  INTEREST  IX  LIVES.  §  65 

icy.  When  this  contractual  relation  does  not  exist,  and  there  are  no 
ties  of  blood  or  marriage,  an  insurance  policy  becomes  what  the  law 
denominates  a  wagering  contract,  and  under  its  rules,  made  and  en- 
forced in  the  interest  of  the  best  public  policy,  all  such  contracts  must 
be  declared  illegal  and  void,  no  matter  what  good  object  the  parties 
may  have  had  in  view.  The  end  will  not,  in  the  eyes  of  the  law,  jus- 
tify the  means." 

§  65.  Interest  based  upon  relationship,  continued. — The  circuit 
court  of  appeals  recently  held  that  the  mere  relation  of  father  and 
son  is  not  enough  to  give  an  adult  son  an  insurable  interest  in  the  life 
of  his  father.64  After  reviewing  the  decisions  the  court  said :  "The 
sum  of  the  decisions  and  of  text-book  discussions  upon  the  subject  of 
insurable  interest  may,  we  think,  be  fairly  stated  thus:  No  person 
has  an  insurable  interest  in  the  life  of  another  unless  he  would  in 
reasonable  probability  suffer  a  pecuniary  loss,  or  fail  to  make  a 
pecuniary  gain,  by  the  other's  death;  or  (in  some  jurisdictions)  un- 
less, in  the  discharge  of  some  undertaking,  he  has  spent  money,  or 
is  about  to  spend  money,  for  the  other's  support  or  advantage.  The 
extent  of  the  insurable  interest — the  amount  for  which  a  policy  may 
be  taken  out,  or  for  which  recovery  may  be  had — is  not  now  under 
consideration.  What  is  often  called  'relationship  insurance'  must  be 
governed  by  this  rule.  It  must  rest  upon  the  foundation  of  a  pecu- 
niary interest,  although  the  interest  may  be  contingent,  and  need  not 
be  capable  of  exact  estimation  in  dollars  and  cents.  Sentiment  or 
affection  is  not  sufficient  of  itself,  although  it  may  often  be  influential 
in  persuading  a  court  or  jury  to  reach  the  conclusion  that  a  bene- 
ficiary had  a  reasonable  expectation  of  pecuniary  advantage  from  the 
continued  life  of  the  insured.  In  one  relation  only — the  relation  of 
husband  and  wife — is  the  actual  existence  of  such  a  pecuniary  interest 
unimportant ;  the  reason  being  that  a  real  pecuniary  interest  is  found 
in  so  great  a  majority  of  cases  that  the  courts  conclusively  presume 
it  to  exist  in  every  case,  whatever  the  fact  may  be,  and  therefore  will 
not  inquire  into  the  true  state  of  a  few  exceptional  instances.  This, 
we  think,  is  essentially  what  is  meant  by  the  declaration  of  courts  and 
text-book  writers  that  the  mere  relationship  of  husband  and  wife  is 
sufficient  to  give  an  insurable  interest.  The  supreme  court  of  Ver- 

04  Life  Ins.  Clearing  Co.  v.  O'Neill,  106  Fed.  800,  45  C.  C.  A.  641,  54  L. 
R.  A.  225,  annotated  (1901). 


§    66  SUBJECT-MATTER   AND   INSURABLE   INTEREST.  64 

rnont05 — alone,  we  think,  among  judicial  tribunals — seems  disposed 
to  hold  the  presumption  to  be  rebuttable.  *  *  * 

"In  all  other  relationships  there  is  no  presumption  of  interest,  and 
no  insurable  interest  exists  unless  the  reasonable  likelihood  of  pecu- 
niary loss  or  gain  is  present  in  actual  fact.  No  doubt,  judicial  lan- 
guage is  to  be  found  supporting  the  view  that  the  mere  relationship 
of  parent  and  child  is  sufficient  to  give  an  insurable  interest. 

"We  think  it  can  not  be  doubted  that  the  tendency  of  the  recent 
decisions  is  to  insist  upon  an  actual  or  presumed  pecuniary  interest  in 
every  case  (although  such  interest  may  no  doubt  be  contingent,  and 
to  some  extent  undefined),  and  to  give  relationship  its  proper  place 
by  regarding  it  merely  as  an  important  factor  in  the  inquiry,  whether 
such  an  interest  does  in  reality  exist.  If,  then,  the  test  of  pecuniary 
interest  is  to  be  applied  to  the  facts  of  the  present  case,  it  is  clear 
that  the  son  had  no  insurable  interest  in  his  father's  life.  Again,  lay- 
ing aside  the  effect  of  the  poor  law  of  Pennsylvania,  it  is  plain  that  the 
son  would  lose  nothing  by  his  father's  death,  and  would  gain  nothing 
by  his  father's  continuance  in  life.  His  father  did  not  support  him, 
and  he  himself  had  not  spent,  nor  was  he  about  to  spend,  any  money 
in  his  father's  behalf  or  support.  Upon  principle,  therefore,  we 
think  that  the  policy  can  not  be  supported." 

§  66.  Illustrations  of  insurable  interest  in  life. — The  following 
instances  will  illustrate  the  extent  and  nature  of  the  interest  which 
will  sustain  a  contract  of  life  insurance.  A  creditor  has  an  insurable 
interest  in  the  life  of  his  debtor,  at  least  for  the  amount  of  his  debt.68 
In  states  which  permit  the  assignment  of  a  valid  policy  to  an  as- 
signee without  interest  the  creditor  is  allowed  to  hold  the  entire  in- 
surance,67 but  where  the  stricter  rule  prevails,  the  creditor,  whether 
named  as  the  original  beneficiary  or  one  to  whom  the  policy  has  been 
assigned,  has  no  further  interest  after  the  payment  of  his  debt,  and  the 
policy  thus  becomes  one  for  the  benefit  of  the  insured,  to  be  collected 
by  his  personal  representatives.68  This  certainly  is  the  rule  where 

"Currier  v.   Continental    L.   Ins.  749   (1890),  it  was  held  that  the  as- 

Co.,  57  Vt.  496  (1885).  signee  of  the  creditor  payee  could 

"  See  §  58,  supra;  Rittler  v.  Smith,  recover  the  whole  amount,  although 

70  Md.  261,  2  L.  R.  A.  844   (1889);  the  debt  was  less. 

Walker  v.  Larkin,  127  Ind.  100,  26  <*Ulrich  v.  Reinoehl,  143  Pa.  St. 

N.  E.  684  (1890).  238,  13  L.  R.  A.  433  (1891);  Cooper 

41  In  Wright  v.  Mutual  Ben.  L.  v.  Shaeffer  (Pa.),  11  Atl.  548  (1887). 
Ass'n,  118  N.  Y.  237,  16  Am.  Rep. 


65  INSURABLE  INTEREST  IN  LIVES.  §  66 

the  policy  is  merely  assigned  the  creditor  as  a  security  for  his  debt. 
He  should  be  permitted  to  retain  out  of  the  proceeds  of  the  policy 
what  is  necessary  to  pay  his  debt,  and  be  required  to  account  for  the 
balance  to  the  representatives  of  the  deceased.69  In  all  cases  a  finan- 
cial interest,  however  slight,  will  sustain  the  policy.  A  creditor  has 
no  insurable  interest  in  the  life  of  his  debtor's  wife.70  A  corpora- 
tion has  no  insurable  interest  in  the  life  of  one  of  its  stockholders  who 
is  not  indebted  to  it.71  A  woman  has  an  insurable  interest  in  the 
life  of  the  man  to  whom  she  is  engaged  to  be  married,  although  he 
has  at  the  time  a  wife  living,  when  he  represented  himself  to  her  as 
a  single  man  and  she  believed  he  was  legally  competent  to  marry  her.72 
A  husband  has  an  insurable  interest  in  the  life  of  his  wife.73  A  re- 
ligious society  supported  largely  through  voluntary  contributions  has 
no  insurable  interest  in  the  life  of  one  of  its  members.74  A  man  may 
take  a  policy  on  his  own  life  and  make  it  payable  to  one  to  whom  he 
is  engaged  to  be  married.75  This  applies  to  the  certificate  of  a  benevo- 
lent society  when  not  prohibited  by  the  statutes  or  rules  of  the  so- 
ciety.76 One  partner  has  an  insurable  interest  in  the  life  of  the  other 
partner,77  but  some  cases  hold  that  the  interest  ceases  when  the  latter 
retires  unindebted  from  the  firm.78  A  woman  to  whom  a  man  is 

•"  Harbour  v.  Larue,  21  Ky.  L.  94,  National  Capitol  L.  Ins.  Co.,  52  Mo. 

51  S.  W.  5;  Roller  v.  Moore,  86  Va.  213   (1873). 

512,    6    L.   R.    A.    136     (1889);     Ex-  70  In   the   absence   of   anything   to 

change  Bank  v.  Loh,  104  Ga.  446,  44  the  contrary  in  the  charter  or  by- 

L.  R.  A.  372  (1898).  laws  or  certificate,  a  mutual  benefit 

70Wheeland  v.  Atwood,  192  Pa.  St.  society  contract   will  be   controlled 

237,  42  W.  N.  C.  178.  by  the  ordinary  principles  govern- 

71  Tate  v.  Commercial,  etc.,  Ass'n,  ing  other    insurance:     Union    Fra- 

97  Va.  74,  33  S.  E.  382  (1899).  ternal  League  v.  Walton,  109  Ga.  1, 

"Taylor  v.  Travelers'  Ins.  Co.,  15  46  L.  R.  A.  424  (1899). 

Tex.    Civ.   App.    254,    39    S.   W.    185  "  Ins.  Co.  v.  Luchs,  108  U.  S.  498 

(1897);    Bogart   v.     Thompson,     24  (1882).     See  notes  in  57  Am.  Dec. 

Misc.   (N.  Y.)  581   (1898)   [a  benevo-  98,   52  Am.  Rep.   140,   46  Am.  Rep. 

lent  society  certificate  payable   "to  190.     In  Powell  v.  Dewey,  123  N.  C. 

his  wife"].  103,   31   S.   E.   381    (1898),    it    was 

73  Currier   v.    Continental   L.    Ins.  held  that  where  the  partners  have 
Co.,  57  Vt.  496,  52  Am.  Dec.  134.    See  no  money  invested,  and  neither  is 
§  65,  supra.  indebted  to  the  other,  neither  part- 

74  Trinity  College  v.  Travelers'  Ins.  ner  has  an  insurable  interest  in  the 
Co.,  113  N.  C.  244,  22  L.  R.  A.  291  life  of  his  copartner. 

(1893).  78Cheeves  v.  Anders,  87  Tex.  287, 

76>  Lemon  v.  Phrenix,  etc.,  Ins.  Co.,     25  S.  W.  324,  47  Am.  St.  107  (1894). 
38  Conn.   294    (1871);    Chisholm  v. 
5 — ELLIOTT  INS. 


§    66  SUBJECT-MATTER   AND   INSURABLE   INTEREST.  66 

engaged  to  be  married  does  not  come  within  the  meaning  of  a  rule 
permitting  a  mutual  benefit  certificate  to  be  made  payable  to  a  person 
"dependent"  upon  the  deceased.  "Dependence  for  favor,  or  for  af- 
fection, or  for  companionship,  or  as  servant  or  retainer,  is  excluded."79 
A  sister  has  an  insurable  interest  in  the  life  of  her  brother  who  stands 
in  loco  parentis.80  A  child  is  presumed  to  have  an  insurable  interest 
in  the  life  of  its  parent,81  a  sister  in  the  life  of  her  brother,82  and 
a  father  in  the  life  of  a  minor  son.83  It  is  said  that  where  the  rela- 
tionship of  brother  and  sister  appears  it  is  incumbent  upon  the  com- 
pany to  show  that  notwithstanding  silch  fact  the  policy  is  a  wager 
contract.8*  A  niece  has  an  insurable  interest  in  the  life  of  an  uncle 
who  has  reared  her  and  continued  to  contribute  to  her  support  after 
her  marriage.85  A  grandson  has  an  insurable  interest  in  the  life  of  his 
grandfather.86  A  son-in-law  has  no  insurable  interest  in  the  life  of 
his  mother-in-law,  who  lives  with  him  and  is  dependent  upon  him 
for  support.87  But  a  mother-in-law  has  been  held  to  have  an  in- 
surable interest  in  the  life  of  her  son-in-law.88  A  stepson  has  no 
insurable  interest  in  the  life  of  his  stepfather,89  but  a  stepfather  is  a 
"relative"  who  may  be  made  the  beneficiary  of  a  benefit  certificate.90 
A  grandfather  has  an  insurable  interest  in  the  life  of  his  grandson.91 
A  mere  assumption  of  parental  relations,  without  any  legal  obligation, 
by  a  man  toward  a  girl  whom  he  has  educated  will  sustain  a  policy 
which  he  procures  and  assigns  to  her.  The  court  stated  that  the  test 
was  whether  the  circumstances  were  such  as  to  justify  the  belief  that 

"Alexander   v.   Parker    (111.),    19  McDonald,  122  Pa.  St.  324    (1888); 

L.   R.   A.    187,    note.     Contra,   Me-  Equitable  L.  Ins.  Co.  v.  Hazlewood, 

Carthy  v.  Supreme  Lodge,  153  Mass.  75  Tex.  338,  7  L.  R.  A.  217  (1889). 
314,  11  L.  R.  A.  144  (1891).  ^McGraw  v.  Metropolitan  L.  Ins. 

80 Lord     v.     Ball,     12     Mass.     115  Co.,  41  W.  N.  C.  (Pa.)  62  (1897). 
(1815).  <*>  Blkhart,  etc.,  Ass'n  v.  Houghton. 

81Crosswell  v.  Connecticut  Indem-  103  Ind.  286   (1885). 
nity  Ass'n,  51  S.  C.  103,  28  S/E.  200        sr  Stambaugh   v.    Blake    (Pa.),   15 

(1897).  Atl.  705   (1888). 

83  Hosmer  v.  Welch,  107  Mich.  470,        *>  Adams  v.  Reed,  18  Ky.  L.  858, 

65  N.  W.  280,  67  N.  W.  504  (1895).  38  S.  W.  420  (1896). 

83  Loomis  v.  Eagle,  etc.,  Ins.  Co.,  6        *  United     Brethren,    etc.,    Soc.   v. 

Gray    (Mass.)    396    (1856).     So     by  McDonald,  122  Pa.  St.  324,  11  L.  R. 

statute:     C.  L.  Mass.,  §  7212  (1897).  A.  238   (1888). 

"^Etna  L.  Ins.  Co.  v.  France,  94        "  Simcoke    v.    Grand    Lodge,    84 

U.  S.  561   (1876);  Crosswell  v.  Con-  Iowa  383,  15  L.  R.  A.  114  (1892). 
necticut  Indemnity  Ass'n,  51  S.  C.        "  Hilliard  v.   Sanford,   4  Ohio  N. 

103;   United  Brethren,  etc.,  Soc.  v.  P.  363. 


67  INSURABLE  INTEREST  IN  LIVES.  §  67 

his  death  would  result  in  a  pecuniary  loss  to  her.92  In  a  recent  case, 
where  the  rule  was  applied  with  much  liberality,  it  was  held  that  an 
aunt  had  an  insurable  interest  in  the  life  of  her  niece,  who  had  lived 
with  her  from  earliest  childhood  and  been  supported  by  her.  After 
reviewing  the  cases,  the  court  said:93  "The  principle  of  these  and 
other  like  cases  is  that  the  interest  does  not  depend  upon  any  liability 
for  support,  nor  upon  any  pecuniary  consideration,  nor  even  upon 
kinship.  It  may  be  for  the  benefit  of  the  old  or  the  young,  where 
the  relation  between  the  parties  is  such  as  to  show  mutual  interest 
and  to  rebut  the  presumption  of  a  mere  wager.  The  contract  is  com- 
plete and  legal  in  itself,  and  when  considerations  of  public  policy  do 
not  prohibit  its  enforcement,  there  is  no  reason  why  it  should  not  be 
carried  out.  The  declaration  in  this  case  shows  that  the  plaintiff's 
claim  is  not  an  objectionable  one  on  the  grounds  of  public  policy.  It 
shows  that  the  relation  of  the  plaintiff  and  her  niece  had  been  of  such 
a  character  that  each  had  reason  to  rely  upon  the  other  in  case  of 
need.  Should  the  younger  die  first,  the  help  and  care  which  might 
have  been  expected  from  her  in  the  declining  years  of  the  aunt  could 
only  be  supplied  by  insurance  upon  her  life.  This  is  no  more  specu- 
lation than  a  husband's  provision  for  his  wife  in  the  same  way." 

A  woman  living  with  a  man  as  his  wife,  although  not  such,  has  an 
insurable  interest  in  his  life:94 

In  many  states  the  right  of  a  wife  to  insure  her  husband's  life  and 
hold  the  proceeds  free  from  the  claims  of  his  creditors  is  secured  by 
statute.94* 

§  67.  Right  of  assignee  without  interest  to  recover  premiums 
paid. — Where  the  assignee  of  a  policy  has  no  insurable  interest  and  is 
free  from  fraud,  he  will  ordinarily  be  protected  to  the  extent  of  the 
money  actually  paid  out  by  him.95  But  he  can  retain  only  enough  of 
the  proceeds  of  the  policy  to  reimburse  him  for  premiums  paid  and 
expenses  incurred  and  interest  thereon.  He  can  only  properly  col- 
lect this  amount  from  the  company,  and  if  the  full  amount  of  the 
policy  is  paid  to  him  he  must  account  for  the  balance  to  the  repre- 

92 Carpenter  v.  U.  S.  L.  Ins.  Co.,  interest  in  the  man's  life:"    Lamp- 

161  Pa.  St.  9,  25  L.  R.  A.  571  (1894).  kin  v.  Travelers'  Ins.  Co.,  11  Colo. 

"'Cronin  v.  Vermont  L.  Ins.  Co.,  App.  249,  52  Pac.  1040  (1898). 

20  R.  I.  570,  40  Atl.  497  (1898).  Ma  See  note  to  Metropolitan  L.  Ins. 

M"A  woman  illegally  married  be-  Co.  v.  Smith  (Ky.),  53  L.  R.  A.  817 

cause  the   husband    has    a    lawful  (1900),  citing  many  cases, 

wife,  or  living  unlawfully  with  a  85  Helmetag  v.  Miller,  76  Ala.  183, 

man  as  his  wife,  has  an  insurable  52  Am.  Rep.  316   (1884). 


§    67  SUBJECT-MATTER   AND   INSURABLE    INTEREST.  68 

sentatives  of  the  insured.  It  is  immaterial  whether  the  policy  is 
made  payable  directly  to  him  or  to  the  assured  and  afterwards  as- 
signed.96 In  a  recent  case  in  Kentucky  a  benefit  certificate,  valid  at 
its  inception,  was  thereafter  assigned  in  part  to  one  who  had  no  in- 
surable  interest,  but  who  agreed  to  pay  the  future  assessments  in  con- 
sideration of  receiving  one-half  of  the  proceeds  of  the  policy  upon 
the  death  of  the  insured.  The  full  amount  of  the  policy  was  paid 
to  the  assignee,  and  it  was  held  that  the  legal  beneficiary  could  col- 
lect from  him  all  the  money  so  paid  less  the  amount  of  the  assess- 
ments actually  paid.  The  court  said:97  "It  seems  to  us  that  the 
appellee  in  this  case  could  have  legally  held  the  benefit  certificate 
for  no  other  purpose  than  as  security  to  indemnify  him  for  moneys 
advanced  to  pay  the  premiums  and  to  be  advanced ;  and  to  this  extent 
his  claim  to  said  policy  was  just;  but  all  overplus  of  said  fund  he 
holds  as  trustee  for  the  benefit  of  the  appellant  in  this  action,  and 
under  an  implied  obligation  to  pay  over  the  same." 

Where  the  rules  of  the  policy  provide  that  no  policy  shall  be  issued 
upon  the  life  of  a  person  without  the  consent  of  such  person  indorsed 
upon  the  application,  and  a  policy  is  issued  in  violation  of  such  rules, 
a  beneficiary  who  was  a  party  to  the  procurement  of  the  contract 
which  was  a  fraud  upon  the  company  can  not  recover  the  premiums 
paid.98 

But  where  the  plaintiff  was  induced  to  procure  such  a  policy  by 
the  fraudulent  statement  of  the  agent  of  the  company  he  was  per- 
mitted to  recover  the  money  paid  as  premiums.  In  this  case  the 
plaintiff  had  taken  out  the  insurance  for  the  benefit  of  his  daughter. 
The  court  said:99  "The  plaintiff,  therefore,  would  be  entitled  to 
recover  unless  he  made  a  wagering  contract  or  was  a  party  to  the 
fraud  of  the  defendant's  agent.  There  is  nothing  in  the  case  to  show 
that  the  plaintiff  derived  any  benefit  either  direct  or  indirect,  so  that  it 
could  not  be  ruled  as  a  matter  of  law  that  the  transaction  was  a  wager 
or  was  other  than  a  gift  for  the  benefit  of  his  daughter." 

"Tate  v.  Commercial  Bldg.  Ass'n,  Ky.  646  (1895),    See  Mutual  L.  Ins. 

97  Va.  74,  33  S.  E.  382  (1889);  New  Co.  v.  Blodgett,  8  Tex.  Civ.  App.  45, 

York  L.   Ins.   Co.  v.   Davis,   96  Va.  27  S.  W.  286  (1894). 

737,  44  L.  R.  A.  305    (1899);    Stam-  "* Fisher   v.    Metropolitan    L.    Ins. 

baugh  v.   Blake    (Pa.),   15   Atl.   705  Co.,  160  Mass.  386  (1894). 

(1888);  Riner  v.  Riner,  166  Pa.  St.  "  McCann  v.  Metropolitan  L.  Ins. 

617  (1895).  Co.,   177    Mass.   280,   58   N.   E.   1026 

"Beard    v.    Sharp,    100     Ky.    606  (1901). 
(1897);    Caudell    v.    Woodward,    96 


69  INSURABLE    INTEREST    IN    LIVES.  §    68 

§  68.  Want  of  interest  as  a  defense  under  incontestable  clause. — 
A  clause  in  a  policy  making  it  incontestable  on  any  ground  after  the 
lapse  of  a  specified  time  does  not  prevent  the  insured  from  defending 
an  action  to  recover  after  loss  upon  the  ground  that  the  policy  was  a 
wager  contract.  Where  this  was  attempted  the  court  said100  that 
"the  clause  by  which  the  company  stipulated  that  this  policy  should 
not  be  disputed  after  one  year  does  not  help  the  respondent's  case. 
Private  interest  must  give  way  before  public  interests.  The  stipula- 
tion itself  is  contrary  to  law  and  order.  The  company's  defense  in 
this  case  is  certainly  not  a  deserving  one,  but  a  defense  like  theirs  to  an 
action  of  this  nature  is  allowed  not  for  the  sake  of  the  defendant,  but 
of  the  law  itself.  There  can  be  no  waiver  of  such  an  objection." 

This  seems  to  be  about  the  only  defense  that  is  not  covered  by  such 
a  clause.  Where  the  assignee  of  a  policy  is  required  to  have  an  in- 
surable  interest  he  is  not  enabled  to  recover  by  reason  of  the  policy 
containing  such  a  clause.101  By  the  weight  of  authority  an  incon- 
testable clause  prevents  the  company  from  interposing  the  defense 
of  fraud  after  the  expiration  of  the  prescribed  period.  It  is  not  an 
agreement  to  condone  fraud,  which  would  be  void  on  the  grounds  of 
public  policy,  but  is  in  the  nature  of  a  statute  of  limitations.  There 
is  no  objection  to  an  agreement  upon  the  part  of  the  company  that 
after  the  expiration  of  a  reasonable  time  in  which  to  investigate  the 
facts  it  will  thereafter  waive  even  the  defense  of  fraud.102 

§  69.  Fact  of  insurable  interest  must  be  pleaded. — In  an  action 
on  an  insurance  contract  the  burden  of  showing  an  insurable  interest 
in  the  beneficiary  is  on  the  plaintiff.  Hence,  a  complaint  which  fails 
to  allege  such  interest  is  bad  on  demurrer.103  An  insurable  interest 

100  Manufacturers'    L.    Ins.    Co.    v.  256,  42  L.  R.  A.  261,  note    (1898); 
Anctil,  28  Can.  S.  C.  103   (1897).  Patterson  v.  Natural  Prem.  Mut.  L. 

101  Clement  v.   New   York   L.   Ins.  Ins.  Co.,  100  Wis.  118,  42  L.  R.  A.  253 
Co.,  101  Tenn.  22,  46  S.  W.  561,  42  (1898).     See  article  in  45  Cent.  L. 
L.  R.  A.  247   (1889).  J.  425.     In  Welch  v.  Union  Cent.  L. 

102  Murray  v.  Mutual,  etc.,  L.  Ass'n  Ins.  Co.,  108  Iowa  224,  50  L.  R.  A. 
(R.    L),    53    L.   R.   A.    742    (1901);  774   (1899),  it  was  held  that  an  in- 
Clement  v.   New  York  L.   Ins.   Co.,  contestable  clause  in  a  policy  does 
101  Tenn.  22,  46  S.  W.  561   (1889);  not  prevent  the  insurance  company 
Wright   v.    Mutual    Ben.    L.    Ass'n,  from  availing  itself  of  the  defense 
118    N.    Y.    237,    6    L.    R.    A.    731  of  fraud  even  after  the  time  limit 
(1890)      [limiting     time     to     sue];  has  passed. 

Brady  v.  Prudential  Ins.  Co.,  168  103  Western  Assur.  Co.  v.  McCarty, 
Pa.  St.  645  (1895);  Massachusetts  18  Ind.  App.  449,  48  N.  B.  265  (1897), 
Ben.  L.  Ass'n  v.  Robinson,  104  Ga.  citing  other  cases. 


§    70  SUBJECT-MATTER   AND   INSURABLE   INTEREST.  70 

is  a  question  of  law  dependent  upon  the  facts,  and  if  the  pleading 
states  the  facts  from  which  the  conclusion  of  an  insurable  interest 
may  be  drawn,  it  is  sufficient.104 

§  70.  Description  of  interest. — If  the  subject  in  which  the  interest 
exists  is  correctly  described,  it  is  not  necessary  that  the  particular 
interest  of  the  insured  be  stated  in  the  policy  unless  it  is  called  for 
by  the  company.  Thus,  an  applicant  for  insurance  is  not  required  to 
show  the  exact  condition  of  his  title  unless  requested  so  to  do.105  This 
is  the  general  rule,  but  where  the  interest  is  of  such  a  nature  as  to 
affect  the  character  of  the  risk  it  should  be  fully  disclosed.  Thus, 
profits  should  be  insured  as  such.106  Where  the  question  was  whether 
the  applicant  had  correctly  described  his  title,  Chief  Justice  Marshall 
said:107  "The  description  was  insufficient,  as  a  precarious  title  de- 
pending for  its  continuance  on  events  which  might  or  might  not  hap- 
pen is  not  such  a  title  as  is  generally  described  in  the  offer  for  insur- 
ance construing  the  words  of  the  offer  as  they  are  fairly  to  be  under- 
stood." 

101  Prudential  Ins.  Co.  v.  Hunn,  21  Am.  St.  745  (1895);  Kenton  Ins.  Co. 

Ind.  App.  525,  52  N.  E.  772   (1899);  v.  Wigginton,  89  Ky.  330,  7  L.  R.  A. 

Northwestern,  etc.,  Ins.  Co.  v.  Wood-  81;   Mackenzie  v.  Whitworth,  L.  R. 

ward,  18  Tex.  Civ.  App.  496,  45   S.  1  Ex.  Div.  36,  13  Eng.  R.  Cas.  322 

W.  185   (1898).  and  notes   (1875). 

105  Prudential  Ins.  Co.  v.  Hunn,  21  1WJ  Niblo    v.    North    American     F. 

Ind.  App.  525,  52  N.  E.  772  (1899),  Ins.  Co.,  1  Sandf.  (N.  Y.  Super.)  551 

and  cases  cited;  Hall  v.  Niagara  F.  (1848). 

Ins.  Co.,  93  Mich.  184,  32  Am.  St.  107  Columbian     Ins.    Co.    v.    Law- 

497  (1892);  Riggs  v.  Commercial  M.  rence,    2    Pet.    (U.    S.)    25    (1829); 

Ins.  Co.,  125  N.  Y.  7,  21  Am.  St.  717  Morrison    v.    Tennessee,     etc.,     Ins. 

(1890);  Rochester  Loan  &  B.  Co.  v.  Co.,   18   Mo.   262,   59   Am.   Dec.   299 

Liberty   Ins.   Co.,   44   Neb.    537,    48  (1853). 


PART  III. 

OF  MATTERS  THAT  RENDER  THE  CONTRACT  VOID 
OR  UNAVAILABLE. 


CHAPTER  V. 

NON-DISCLOSURE     OF     MATERIAL    FACTS. 


78.  In  general.  86.  Where  no  written  application  is 

79.  Duty  of  applicant.  made. 

80.  Concealment — Definition.  87.  Incomplete  answers  to  inquiries. 

81.  Rule  as  affected  by  the  charac-  88.  Answers  calculated  to  mislead — 

ter  of  the  insurance.  Irresponsive  answers. 

82.  Modern     rule     in     the     United  89.  Time  of  concealment. 

States.  90.  Materiality. 

83.  What  must  be  communicated.  91.  Concealment    through    inadvert- 

84.  Where     specific     inquiries     are  ence  or  negligence. 

made.  92.  Concealment    or    misrepresenta- 

85.  Basis  of  the  rule.  tion  by  agent. 

93.  Knowledge  of  agent,  continued. 

§  78.  In  general. — The  first  step  toward  effecting  a  contract  of 
insurance  is  the  application.  It  may  be  oral,  but  it  is  usually  made 
upon  a  printed  form  prepared  and  furnished  by  the  insurance  com- 
pany. The  written  application  is  always  used  when  applying  for 
insurance  other  than  against  loss  by  fire.  This  application,  which 
the  applicant  is  required  to  sign,  contains  numerous  inquiries  calling 
for  specific  information  with  reference  to  matters  deemed  material 
by  the  company.  They  are  directed  to  things  of  which  the  applicant 
is  presumed  to  have  knowledge,  and  of  which  the  company  should  be 
informed  in  order  to  determine  whether  it  will  accept  the  risk,  and, 
if  so,  upon  what  terms  and  conditions.  This  application,  when  duly 
filled  out  and  signed  by  the  applicant,  is  forwarded  to  the  company, 

(71) 


§    79  MATTERS    VOIDING    CONTRACT.  72 

and  contains  the  information  upon  which  the  company  relies  in  ac- 
cepting the  risk  and  issuing  its  written  policy.1 

§  79.  Duty  of  applicant. — The  person  applying  for  insurance  owes 
a  duty  to  the  proposed  insurer,  which  requires  that  he  shall  put  him 
in  possession  of  all  facts  which  are  within  his  knowledge,  or  which  it 
is  his  duty  to  know,  and  which  it  is  material  that  the  insurer  should 
know.  The  concealment  or  misstatement  of  material  matters  may 
justify  the  insurer  in  repudiating  the  obligation  of  the  contract,  even 
after  there  has  been  a  loss.  This  subject  is  commonly  discussed  under 
the  heads  of  concealment  and  misrepresentation  and  relates  simply  to 
those  matters  which  induce  the  contract. 

Those  statements  which  are  warranted  are  inserted  in  the  contract 
and  constitute  one  of  the  provisions  or  conditions  of  the  printed  pol- 
icy. 

§  80.  Concealment — Definition. — In  the  law  of  insurance,  the  in- 
tentional withholding  from  the  insurer  of  facts  which  are  material 
and  prejudicial  to  the  risk,  and  which  ought  in  good  faith  to  be  known 
to  the  insurer,  is  called  concealment.  It  has  been  said  that  "every 
fact  and  circumstance  which,  can  possibly  influence  the  mind  of  the 
insurer  in  determining  whether  he  will  underwrite  the  policy,  and 
at  what  premium,  is  material  to  be  disclosed,  and  concealment  thereof 
will  vitiate  the  policy."2 

§  81.    Rule  as  affected  by  the  character  of  the  insurance. — The 

English  courts  recognize  but  one  rule  and  apply  it  to  all  insurance 
contracts.  "I  am  not  prepared,"  said  Sir  George  Jessel,3  "to  lay 
down  the  law  as  making  any  difference  in  substance  between  one  con- 
tract of  insurance  and  another.  Whether  it  is  life,  or  fire,  or  marine 

lAs  to  the  requirement  that  the  3  London  Assurance  v.  Mansel,  L. 

application  must  be  signed  by  the  R.    11    Ch.    Div.    363,    367     (1879); 

applicant,    see    Somers    v.     Kansas  Lindenau  v.  Desborough,  8  Barn.  & 

Prot.  Union,  42   Kan.   619,   22   Pac.  C.  586   (1828).     In  the  leading  case 

702    (1889).     The    statements    may  of   Carter  v.   Boehm,   2   Burr.   1905 

be  adopted  by  an  applicant  who  does  (1766),  the  rule  in  marine  insurance 

not  sign  the  application:     Pruden-  is  stated  as  it  now  prevails  in  En- 

tial   Ins.  Co.   v.  Fredericks,   41   111.  gland  and  the  United   States.     See 

App.  419  (1891).  Sun  Mut.  Ins.  Co.  v.  Ocean  Ins.  Co., 

'Ely  v.  Hallett,  2  Caines   (N.  Y.)  107  U.  S.  485  (1882). 
57   (1804),  note. 


73  NONDISCLOSURE    OF    MATERIAL    FACTS.  §    81 

insurance,  I  take  it,  good  faith  is  required  in  all  cases,  and,  although 
there  may  be  certain  circumstances  from  the  peculiar  nature  of  ma- 
rine insurance  which  require  to  be  disclosed,  and  do  not  apply  to 
other  contracts  of  insurance,  that  is  rather,  in  my  opinion,  an  illus- 
tration of  the  application  of  the  principle  than  a  distinction  in  prin- 
cipled 

This  rule  was  recently  applied  in  the  house  of  lords  to  a  contract 
involving  the  solvency  of  a  guarantor  on  a  promissory  note.  It  ap- 
peared that  there  were  facts  known  to  the  applicant  affecting  the 
financial  condition  of  the  maker  of  the  note  and  the  guarantor,  which 
were  not  known  to  the  company ;  and  it  was  held  that  the  concealment 
of  such  facts  prevented  a  recovery  on  the  policy.4 

This  strict  rule  of  the  English  courts  is  applied  to  marine  insur- 
ance in  this  country,  but  by  the  weight  of  authority  it  does  not  gov- 
ern other  kinds  of  insurance  contracts.  The  unusual  conditions 
which  surround  the  contract  of  marine  insurance  are  not  present  when 
an  application  is  made  for  life  or  fire  insurance,  and  much  impor- 
tance has  been  given  to  the  general  practice  of  insurance  companies, 
which  require  applicants  to  sign  written  applications  containing  an- 
swers to  a  great  number  of  specific  inquiries.  In  such  cases  the  in- 
ference is  that  the  company  has  made  inquiry  for  the  purpose  of 
eliciting  information  with  reference  to  all  the  facts  of  which  it  de- 
sires information,  and  the  applicant  is  thus  excused  from  volunteer- 
ing any  statement  with  reference  to  other  matters,  unless  of  some  ex- 
traordinary character,  or  the  suppression  of  which  is  fraudulent.5  In 
some  of  the  earlier  cases  the  rule  of  marine  insurance  was  applied  to 
fire  insurance  contracts.  Thus,  Mr.  Justice  Story  said  :6  "The  rules 
as  to  misrepresentations  and  concealments,  or  omissions  to  state  facts 
material  to  the  risk,  are  more  strict  in  cases  of  marine  than  in  fire 
insurance.  But  the  differences  are  founded  on  the  difference  in  the 
character  of  the  property  and  of  the  greater  facilities  insurers  possess 
for  obtaining  information  as  to  conditions  and  surrounding  circum- 
stances in  cases  of  insurance  on  buildings,  etc.,  than  on  vessels  which 
are  often  insured  when  absent  or  afloat,  and  the  distinctions  are  ap- 
plied ordinarily  in  cases  where  the  insurer  sets  up  the  omission  of  the 

4Seaton  v.  Heath,  68  L.  J.  Q.  B.  798    (1891);    Wytheville  Ins.  Co.  v. 

(N.  S.)  631   (1899).  Stultz,  87  Va.  629,  13  S.  E.  77  (1891). 

5  Phoenix  Ins.  Co.  v.  Raddin,  120  "  Carpenter  v.  American  Ins.  Co., 

U.  S.  183    (1886);    Vankirk  v.  Citi-  1  Story  (C.  C.)  57  (1839). 
zens'  Ins.  Co.,  79  Wis.  627,  48  N.  W. 


§    82  MATTERS   VOIDING    CONTRACT.  74 

insured  to  state  material  facts.  In  these  cases  there  is  a  difference 
between  the  rules  applicable  to  marine  and  fire  insurance.  But 
where  the  defense  is  a  material  affirmative  misrepresentation  as  to  a 
matter  which  is  presumably  within  the  knowledge  of  the  party  apply- 
ing for  the  insurance,  and  as  to  which  the  insurer  has  not  the  same 
means  of  knowledge,  there  is  no  ground  for  any  distinction  between 
cases  of  fire  and  marine  insurance." 

§  82.  Modern  rule  in  the  United  States. — The  question  was  re- 
cently given  elaborate  consideration  in  the  circuit  court  of  appeals, 
and  the  conclusion  reached  that,  by  the  weight  of  authority  in  this 
country,  the  strict  rules  which  govern  the  contract  of  marine  insur- 
ance do  not  apply  to  other  insurance  contracts.7  After  noting  the 
practice  of  making  full  inquiry  by  specific  questions,  and  the  different 
nature  of  the  conditions  and  circumstances  surrounding  the  parties 
and  the  risk,  the  court  said  that  the  insured  "can  only  be  said  to  fail 
in  his  duty  to  the  insurer  when  he  withholds  from  him  some  fact, 
which,  though  not  made  the  subject  of  inquiry,  he  nevertheless  believes 
to  be  material  to  the  risk,  and  actually  is  so,  for  fear  it  would  induce 
a  rejection  of  the  risk,  or,  what  is  the  same  thing,  with  fraudulent 
intent.  *  *  *  Nor  does  this  rule  result  in  practical  hardship  to 
the  insurer,  for  in  every  case  where  the  undisclosed  fact  is  palpably 
material  to  the  risk,  the  mere  non-disclosure  is  itself  strong  evidence 
of  fraudulent  intent.  Thus,  if  a  man  about  to  fight  a  duel  should 
obtain  life  insurance  without  disclosing  his  intention,  it  would  seem 
that  no  argument  or  additional  evidence  would  be  needed  to  show 
the  fraudulent  character  of  the  non-disclosure.  On  the  other  hand, 
where  men  may  reasonably  differ  as  to  the  materiality  of  a  fact  con- 
cerning which  the  insurer  might  have  elicited  further  information, 
and  did  not  do  so,  the  insurer  occupies  no  such  position  of  disadvan- 
tage in  judging  of  the  risk  as  to  make  it  unjust  to  require  that  before 
the  policy  is  avoided  it  shall  appear  not  only  that  the  undisclosed  fact 
was  material,  but  also  that  it  was  withheld  in  bad  faith.  To  hold  that 
good  faith  is  immaterial  in  such  a  case  is  to  apply  the  harsh,  rigorous 
rule  of  marine  insurance  to  a  class  of  insurance  contracts  differing  so 
materially  from  marine  policies  in  the  circumstances  under  which  the 
contracting  parties  agree  that  the  reason  for  the  rule  ceases.  The  au- 

7Penn  Mut.   Life   Ins.   Co.   v.   Mechanics',   etc.,   Co.,   72   Fed.   413,   19 
C.  C.  A.  286  (1896). 


75  NON-DISCLOSURE   OF   MATERIAL   FACTS.  §    83 

thorities  are  not  uniform,  and  we  are  able  to  take  that  view  which 
is  more  clearly  founded  in  reason  and  justice."  After  referring  to 
certain  cases  the  court  further  said:  "We  think  the  modern  ten- 
dency, even  of  Massachusetts  decisions,  is  to  require  that  a  non-disclos- 
ure of  a  fact  not  inquired  about  shall  be  fraudulent  before  vitiating 
the  policy,  and,  as  already  stated,  this  view  is  founded  upon  the  better 
reason.  The  subject  is  by  no  means  as  clear  upon  the  authorities  as 
could  be  wished." 

§  83.  What  must  be  communicated. — The  recognized  rule  is  that 
each  party  to  a  contract  of  insurance  must  communicate  to  the  other 
in  good  faith  all  facts  within  his  knowledge  which  are,  or  he  believes 
to  be,  material  to  the  risk,  and  which  the  other  has  not  the  means  of 
ascertaining  and  as  to  which  no  warranty  is  made.  If  specific  in- 
formation is  required  by  the  insurer  on  any  point  he  deems  material 
it  must  be  fully  and  correctly  communicated.8  On  the  other  hand, 
neither  party  is  required  to  communicate  information  except  in  an- 
swer to  inquiries  of — 

(1)  Matters  which  the  other,  or  his  duly  authorized  agent,  knows. 

(2)  Matters  of  which,  in  the  exercise  of  ordinary  care,  the  other, 
or  his  duly  authorized  agent,  ought  to  know,  and  of  which  the  appli- 
cant has  no  reason  to  believe  he  is  ignorant.9 

8  Valton  v.  National  Fund  L.  As-  policy  is  made,  either  as  to  taking 
sur.  Co.,  20  N.  Y.  32  (1859);  Nor-  the  contract  of  insurance,  or  as  to 
wich  F.  Ins.  Co.  v.  Boomer,  52  111.  the  premium  on  which  he  would 
442  (1869).  The  applicant  is  not  take  it.  The  materiality  of  the  fact 
bound  to  disclose  the  nature  of  his  depends  upon  whether  or  no  a  pru- 
interest,  unless  interrogated  with  dent  underwriter  would  take  the 
reference  thereto:  See  §  70,  supra,  facts  into  consideration  in  estimat- 
In  Tate  v.  Hyslop,  L.  R.  15  Q.  B.  D.  ing  the  premium  or  in  undervaluing 
368  (1885),  Lord  Justice  Bowen  the  policy."  See  §  84,  infra. 
said:  "It  is  established  law  that  a  9  Carter  v.  Boehm,  2  Burr.  1905 
person  dealing  with  underwriters  (1766),  Lord  Mansfield;  Green  v. 
must  disclose  to  them  all  the  ma-  Merchants'  Ins.  Co.,  10  Pick.  (Mass.) 
terial  facts  which  are  known  to  himr  402  (1830);  Richards  v.  Washing- 
self  and  not  to  them,  or  at  all  events  ton  F.  &  M.  Ins.  Co.,  60  Mich.  420 
all  facts  which  they  are  not  bound  (1886).  The  innocent  concealment 
to  know.  What  are  material  facts  of  matters  which  may  be  discovered 
has  been  denned  by  authority.  It  by  an  examination  of  the  property 
is  the  duty  of  the  assured  to  commu-  has  no  effect:  Continental  Ins.  Co. 
nicate  all  facts  within  his  knowl-  v.  Kasey,  25  Gratt.  (Va.)  268  (1874); 
edge  which  would  anect  the  mind  of  same  rule  under  statute:  Insur- 
the  underwriters  at  the  time  the  ance  Co.  v.  Leslie,  47  Ohio  St.  409 


§    8-i  MATTERS   VOIDING    CONTRACT.  76 

(3)  Matters  of  which  information  is  waived. 

(4)  Matters  which  prove  or  tend  to  prove  the  existence  of  a  risk 
excluded  by  a  warranty,  and  which  are  not  otherwise  material.10 

(5)  Matters  which  relate  to  a  risk  excepted  from  the  policy  and 
not  otherwise  material. 

(6)  Mere  matters  of  opinion  or  belief. 

§  84.  Where  specific  inquiries  are  made. — As  already  stated,  the 
strict  rule  governing  concealment  in  cases  of  marine  insurance  is 
somewhat  relaxed  in  the  case  of  fire  and  life  insurance.  From  the 
nature  of  the  risk  the  insurer  may  fairly  be  presumed  to  have  a  better 
knowledge  of  the  circumstances,  and  the  practice  of  making  specific 
inquiries  with  reference  to  matters  of  which  the  insurer  desires  in- 
formation may  well  suggest  the  conclusion  that  all  material  facts 
are  called  for.  It  has  therefore  been  held  that  where  there  is  a  writ- 
ten application  containing  answers  to  specific  questions,  an  innocent 
failure  by  an  applicant  for  fire  insurance  to  communicate  facts  about 
which  he  is  not  asked,  will  not  avoid  the  policy,11  and  the  same  rule 
undoubtedly  applies  to  life  insurance.  But  this  must  be  taken  in 
connection  with  the  statement  that  actual  fraud  always  vitiates  the 
contract,  and  subject  to  the  provision  that  the  insured  must  commu- 
nicate all  knowledge  which  he  has,  or  is  by  law  required  to  have,  of 
unusual  or  extraordinary  circumstances  of  peril  to  which  the  property 
is  exposed,  when  the  same  could  not  with  reasonable  diligence  be 
known  by  the  insurer  or  reasonably  anticipated  by  him  as  the  founda- 
tion of  suitable  inquiries.12  This  is  illustrated  by  a  case  where  the 
applicant  knew  that  an  attempt  had  been  made  to  burn  the  building 
which  was  the  subject-matter  of  the  insurance.13  The  rule  is  not 

(1890).  As  to  constructive  knowl-  Penn  Mut.  L.  Ins.  Co.  v.  Wiler,  100 

edge  of  facts  where  the  insurance  Ind.  92  (1884);  Sibley  v.  Prescott 

company  is  required  by  its  charter  Ins.  Co.,  57  Mich.  14  (1885);  Carson 

or  by-laws  to  make  a  survey,  see  v.  Jersey  City  Ins.  Co.,  43  N.  J.  L. 

Satterthwaite  v.  Mutual  Ben.  Ins.  300,  39  Am.  Rep.  584,  44  N.  J.  L. 

Ass'n,  14  Pa.  St.  393  (1850).  210  (1881);  Campbell  v.  American 

10DeWolf  v.  New  York,  etc.,  Ins.  P.  Ins.  Co.,  73  Wis.  100  (1888); 

Co.,  20  John.  (N.  Y.)  214  (1822)  Hosford  v.  Germania  F.  Ins.  Co.,  127 

[marine  case].  U.  S.  399  (1887). 

"Washington  Mins  Mfg.  Co.  v.  "Hartford,  etc.,  Ins.  Co.  v.  Har- 

Weymouth  Ins.  Co.,  135  Mass.  503  mer,  2  Ohio  St.  452,  59  Am.  Dec.  684 

(1883);  Browning  v.  Home  Ins.  Co.,  (1853);  North  American,  etc.,  Ins. 

71  N.  Y.  508  (1887);  Boggs  v.  Co.  v.  Throop,  22  Mich.  146  (1871). 

America  Ins.  Co.,  30  Mo.  63  (1860);  "Walden  v.  Louisiana  Ins.  Co.,  12 


77  NON-DISCLOSURE    OF    MATERIAL    FACTS.  §    85 

changed  by  a  provision  in  the  policy  that  full  disclosure  must  be 
made  concerning  the  matters  to  which  the  specific  questions  relate.14 

§  85.  Basis  of  the  rule. — Language  will  be  found  in  some  of  the 
books  which  suggests  that  fraud,  actual  or  constructive,  is  the  founda- 
tion of  the  concealment  which  will  prevent  the  enforcement  of  a  con- 
tract of  insurance.  Arnould  says  that  the  doctrine  in  the  English 
courts  is  that,  although  no  pretext  exists  for  anything  like  actual 
fraud,  yet  the  policy  is  to  be  considered  void  on  the  ground  of  con- 
structive or  legal  fraud.  His  reason  for  adhering  to  this  phraseology 
is  that,  as  a  representation,  through  mistake  or  inadvertence,  has  the 
same  effect  as  an  intentional  and  literally  false  representation  or 
concealment — that  is,  it  induces  the  insurer  to  enter  into  a  contract 
which  he  would  otherwise  have  declined,  or  to  take  a  less  premium 
than  he  would  otherwise  have  demanded — it  is  at  least  excusable  to 
apply  the  word  fraud;  and  this  brings  the  doctrine  upon  a  subject 
nominally  within  the  acknowledged  general  principles  applicable  to 
other  contracts.15  But  it  is  somewhat  misleading,  and  it  is  much  bet- 
ter to  state  the  doctrine  in  direct  terms — that  it  is  an  implied  condi- 
tion of  the  contract  of  insurance  that  it  is  free  from  misrepresenta- 
tion or  concealment,  whether  fraudulent  or  through  mistake.16  Lord 
Esher  thus  stated  the  rule:17  "The  freedom  from  misrepresentation 
or  concealment  is  a  condition  precedent  to  the  right  of  the  insured  to 
insist  on  the  performance  of  the  contract,  so  that  on  a  failure  of  the 
performance  of  the  condition,  the  assured  can  not  enforce  the  con- 
tract." In  the  same  case,  Lord  Justice  Lindley  said  that  in  his  opin- 
ion Duer  and  Phillips  are  right  in  concluding  that  fraud  on  the  part 
of  the  assured  is  not  essential  to  discharge  the  insurer  on  the  ground 
of  misrepresentation  or  concealment.  This  principle  governs  all 
cases  of  marine  insurance  in  the  United  States  as  well  as  in  England, 
and  has  been  applied  to  many  cases  of  other  kinds  of  insurance.  But 
it  is  inconsistent  with  the  principle  of  those  cases  which  hold  that 
an  innocent  misrepresentation  will  not  avoid  the  policy. 

La.   134,   32   Am.   Dec.   116    (1838);  by  a  refusal  to  answer  a  question: 

Bebee   v.    Hartford    County    M.    F.  American  L.  Ins.  Co.  v.  Mahone,  56 

Ins.  Co.,  25  Conn.  56,  65  Am.  Dec.  Miss.  180   (1878),. 

553   (1856).     But  see  German-Amer.  "Arnould  Mar.  Ins.  514. 

Ins.   Co.  v.  Norris,   100  Ky.   29,   66  16  Phillips  Ins.,  §§  287,  537. 

Am.  St.  324  (1896).  "Blackburn  v.  Vigors,  55  L.  J.  Q. 

"Dunbar  v.    Phenix^Ins.    Co.,   72  B.  (N.  S.)  347,  L.  R.  17  Q.  B.  D.  578 

Wis.  492,  40  N.  W.  386*   (1888).     Or  (1886). 


§    86  MATTERS   VOIDING   CONTRACT.  78 

§  86.  Where  no  written  application  is  made. — Where  the  insurer 
asks  no  questions  and  the  applicant  makes  no  representations,  and 
there  is  no  written  application,  there  are  cases  which  relieve  the  ap- 
plicant from  any  duty  to  make  a  disclosure  unless  the  concealment  is 
fraudulent.  Under  this  rule,  where  no  inquiries  are  made,  the  in- 
tention of  the  party  becomes  very  material.  It  is  said  that  where 
there  is  no  written  application  for  fire  insurance,  and  no  representa- 
tions are  made  "concerning  the  situation,  value  or  risk  of  the  prop- 
erty insured,  and  there  is  no  fraudulent  suppression  of  a  material 
fact,  or  in  case  a  printed  slip  is  furnished  describing  the  property  in 
the  most  general  terms,  and  the  insurers  issue  the  policy  upon  their 
own  examination,  they  can  not,  after  a  loss,  avail  themselves  of  their 
own  negligence  in  failing  to  make  proper  inquiries  to  defeat  the  pol- 
icy."18 This  is  sometimes  carried  so  far  as  to  practically  destroy  the 
rule  of  concealment  and  release  the  applicant  from  any  duty  except  to 
answer  questions.  In  the  supreme  court  of  the  United  States  it  was 
said:19  "But  the  relation  of  the  parties  seems  entirely  changed  if 
the  insurer  asks  no  information  and  the  insured  makes  no  representa- 
tions. That  is  the  chief  novelty  of  this  question,  as  hypothetically 
stated  in  the  bill  of  exceptions.  We  think  that  the  governing  test 
is  this:  It  must  be  presumed  that  the  insurer  has  in  person  or  by 
agent  in  such  a  case  obtained  all  the  information  desired  as  to  the 
premises  insured,  or  ventures  to  take  the  risk  without  it,  and  that  the 
insured,  being  asked  nothing,  has  a  right  to  presume  that  nothing  on 
the  risk  is  desired  from  him."  This  was  recently  followed  in 
Washington,20  where  it  appeared  that  no  questions  were  asked 
and  no  representations  made,  but  that  the  policy  contained  a  pro- 
vision requiring  a  full  disclosure  of  certain  matters.  "There  having 
been  no  written  application,"  said  the  court,  "in  which  questions  were 
asked  and  answered  concerning  the  status  of  the  property,  we  think, 
under  the  authorities  and  as  a  question  of  right,  that  this  condition 
which  is  injected  into  the  policy  among  numerous  other  conditions, 
more  or  less  technical,  and  hard  to  understand  by  the  ordinary  mind, 

18  Joyce  Ins.,  §  1871;   Pelzer  Mfg.  tock  Ins.  Co.  v.  Rodefer,  92  Va.  747, 

Co.  v.  Sun  Fire  Office,  36  S.  C.  213,  53  Am.  St.  846  (1896). 

15    S.   E.    562    (1891);    Gristock   v.  19  Clark  v.  Manufacturers' Ins.  Co., 

Royal  Ins.  Co.,  87  Mich.  428,  49  N.  8  How.  (U.  S.)  235  (1850). 

W.  634   (1891);   Western,  etc.,  Pipe  ""Dooly  v.  Hanover  Fire  Ins.  Co., 

Lines  v.  Home  Ins.  Co.,  145  Pa.  St.  16  Wash.  155,  58  Am.  St.  26  (1896), 

346,  22  Atl.  665   (1891).     See  Moro-  citing  cases. 


79  NON-DISCLOSURE    OF    MATERIAL    FACTS.  §    87 

ought  not  to  prevent  a  recovery  in  the  absence  of  any  misrepresenta- 
tion on  the  part  of  the  assured.  The  insured,  as  a  matter  of  fact, 
ordinarily  knows  nothing  about  the  policy  until  it  is  made  out  and 
returned  to  h^m  after  the  payments  for  the  same  have  been  made  to 
the  agent  at  the  time  the  contract  was  made,  and  the  insurer,  having 
failed  to  obtain  the  information,  must  be  held  to  have  done  so  at  his 
peril."  . 

§  87.  Incomplete  answers  to  inquiries. — It  is  the  duty  of  the  ap- 
plicant to  answer  fully  and  fairly  all  inquiries  made  with  reference 
to  the  risk,  but  if  such  questions  are  not  answered,  or  are  incom- 
pletely answered,  and  the  insurer,  without  further  inquiry  or  inves- 
tigation, issues  the  policy,  he  will  be  held  to  have  waived  his  right  to 
a  more  complete  answer  and  elected  to  accept  the  risk  with  the  in- 
formation actually  given.  As  said  by  Mr.  Justice  Gray:21  "Where 
upon  the  face  of  the  application  a  question  appears  to  be  not  answered 
at  all,  or  to  be  imperfectly  answered,  and  the  insurers  issue  a  policy 
without  further  inquiry,  they  have  waived  the  want  or  imperfection 
in  the  answer  and  rendered  the  omission  to  answer  more  fully  im- 
material." The  English  courts  apply  a  contrary  rule,  and  in  com- 
menting upon  one  of  the  leading  cases,22  Justice  Gray  says  that  so 
much  of  the  language  as  "implies  that  an  insurance  company  is  not 
bound  to  look  with  the  greatest  attention  at  the  answers  of  the  appli- 
cant, to  the  great  number  of  questions  framed  by  the  company  or  its 
agents,  and  that  the  intentional  omission  of  the  insured  to  answer 
a  question  put  to  him  is  a  concealment  which  will  void  the  policy 
issued  without  further  inquiry,  can  hardly  be  reconciled  with  the 
uniform  current  of  American  authorities." 


J1  Phoenix  L.  Ins.  Co.  v.  Raddin,  not  issue  to  him  the  policy  as  it 
120  U.  S.  183  (1887).  See  also  Hig-  pleased  on  such  facts  as  the  corn- 
gins  v.  Phoenix  M.  L.  Ins.  Co.,  74  N.  pany  had."  No  breach  of  warranty 
Y.  9  (1878).  In  Parker  v.  Otsego  can  be  based  upon  such  an  answer, 
County,  etc.,  F.  Ins.  Co.,  47  N.  Y.  as  a  breach  of  warranty  must  be 
App.  Div.  204  (1900),  the  court  said:  based  upon  the  affirmation  of  some- 
"The  failure  to  answer  the  ques-  thing  not  true:  Dilleber  v.  Home  L. 
tion  implied  in  the  paragraph  re-  Ins.  Co.,  69  N.  Y.  256,  25  Am.  Rep. 
ferred  to,  or  answering  it  to  a  cer-  182  (1877);  Penn  Mut.  L.  Ins.  Co. 
tain  point  and  not  completing  the  v.  Wiler,  100  Ind.  92  (1884). 
answer,  was  notice  to  the  company  22  London  Assur.  v.  Mansel,  L.  R. 
simply  that  he  declined  to  divulge,  11  Ch.  Div.  363  (1879). 
and  the  company  might  or  might 


§    88  MATTERS   VOIDING   CONTRACT.  80 

§  88.  Answers  calculated  to  mislead — Irresponsive  answers. — 
Where  the  matters  in  question  are  open  to  general  observation  the  ap- 
plicant need  not  go  into  details,  but  may  make  general  statements 
and  leave  the  insurer  to  make  other  inquiries  if  he  desires  further 
information.23  Although  a  failure  to  answer  a  question  or  an  ap- 
parently incomplete  answer  will  not  avoid  a  policy  issued  without 
further  inquiry,  it  is  the  duty  of  the  applicant  to  give  answers  which 
are  clear  and  specific,  and  not  evasive  and  calculated  to  mislead.24 
Where  a  disclosure  is  required  it  should  be  full  and  complete,  not 
partial,  evasive  or  calculated  to  deceive,  omitting  matters  of  impor- 
tance or  materiality  which,  if  disclosed,  would  make  the  answer  full.25 
An  irresponsive  answer  can  not  constitute  a  warranty,  although  it 
may  be  a  representation,  and  thus  invalidate  the  policy  if  material 
and  also  false. 

"The  answer  to  a  material  question  may  be  in  itself  wholly  imma- 
terial and  of  no  effect.  An  answer  so  irresponsive  as  to  leave  the  fact 
of  inquiry  wholly  undisclosed,  the  question  unanswered,  will  not  avoid 
the  contract  in  the  absence  of  fraud."26 

§  89.  Time  of  concealment. — The  concealment  which  will  invali- 
date a  contract  of  insurance  refers  to  the  time  of  making  the  con- 
tract, and  not  to  the  event  itself.  It  can  not  be  made  to  depend  upon 
a  subsequent  event  or  upon  facts  learned  by  the  insured  after  the  risk 
has  attached.27 

§  90.  Materiality. — A  fact  is  material  within  the  meaning  of  this 
rule  when  it  would  influence  the  mind  of  the  insurer  in  determining 
whether  he  would  accept  the  risk,  or  the  amount  of  the  premium 
charged.28  It  has  been  said  that  only  such  facts  as  are  material  to  the 

23  Fowler  v.  JEtna  P.   Ins.  Co.,  6  K  American  L.  Ins.  Co.  v.  Mahone, 
Cow.    (N.  Y.)   673,  16  Am.  Dec.  460  56  Miss.  180  (1878).     See  Sladden  v. 
(1827).  New  York  L.  Ins.  Co.,  86  Fed.  102, 

24  Phoenix  Ins.  Co.  v.  Raddin,  120  M  C.  C.  A.  596  (1898). 

U.  S.  183   (1887);   Moulor  v.  Amer-  K  Ferine  v.  Grand  Lodge,  51  Minn. 

ican  L.  Ins.  Co.,  Ill  U.  S.  335  (1884).  224,  53  N.  W.  367  (1892). 

A  mere  check-mark  placed  after  a  "  Lynch  v.  Dunsford,  14  East  494 

question  can  not  be  deemed  a  nega-  (1811). 

tive  answer  when  the  same  kind  of  ^  Daniels  v.  Hudson  River  F.  Ins. 

marks  appear  after  other  questions  Co.,  12  Cush.    (Mass.)   416,  59  Am. 

not   answered    and    deemed    imma-  Dec.   192    (1853);    Clark    v.    Union 

terial:     Manhattan    L.    Ins.     Co.    v.  Mut.  F.   Ins.  Co.,  40  N.  H.  333,  77 

Willis,  60  Fed.  236,  8  C.  C.  A.  594.  Am.  Dec.  721   (1860);  Waterbury  v. 


81  NON-DISCLOSURE    OF    MATERIAL    FACTS.  §    91 

risk  may  be  availed  of ;  but  the  better  rule  is  that  any  fact,  the  knowl- 
edge or  ignorance  of  which  would  materially  influence  the  judgment  of 
the  underwriter  in  making  the  contract  or  in  determining  the  pre- 
mium, is  material,  and,  subject  to  the  limitations  already  stated, 
should  be  disclosed.29  Matters  with  reference  to  which  inquiry  has 
been  made  are  always  treated  as  material.  In  other  cases  the  question 
of  materiality  is  for  the  jury  to  determine.30 

§  91.  Concealment  through  inadvertence  or  negligence. — While 
the  decisions  are  not  uniform,  there  is  high  authority  for  the  view 
that  under  modern  conditions  the  concealment  of  a  material  fact 
through  inadvertence  or  mistake,  and  without  fraudulent  intent,  will 
not  invalidate  a  contract  of  insurance.31  This  tendency  also  appears 
by  the  enactment  of  statutes  providing  that  false  representations  shall 
not  invalidate  the  contract  unless  they  increase  the  risk  or  are  fraudu- 
lently made.  We  have  found  that  the  concealment  which  will  au- 
thorize the  rescinding  of  a  contract  of  insurance  is  not  necessarily 
fraudulent,32  and  there  are  many  cases  which  hold  that  a  false  state- 
ment of  a  material  fact  is  sufficient  to  avoid  a  policy  written  on  the 
faith  thereof,  although  it  was  made  through  inadvertence  or  mistake.33 

Dakota  F.  &  M.  Ins.  Co.,  6  Dak.  468,  32  If   the    concealment   of    a    ma- 

43  N.  W.  697  (1889).  terial  fact  is  intentional,  it  is  a  case 

29  Boggs  v.  American  Ins.  Co.,  30  of  actual  fraud  and  avoids  the  con- 
Mo.  63  (1860).  tract:  Daniels  v.  Hudson  River  F. 

^Penn    Mut.   L.    Ins.    Co.   v.    Me-  Ins.   Co.,   12   Gush.    (Mass.)    416,  59 

chanics',  etc.,  Co.,  19  C.  C.  A.  286,  Am.  Dec.  192  (1853).     See  §  85,  stir 

305   (1896)   [disapproving  statement  pra. 

in  Provident,  etc.,  Soc.  v.  Llewellyn,  33  Carpenter  v.  American  Ins.  Co., 

7  C.  C.  A.  579   (1893),  to  the  effect  1  Story  (C.  C.)  57  (1839).     A  party 

that    the    materiality    of    insured's  is    not    excused    from    the    conse- 

having  had  delirium  tremens  is  a  quences  of  concealment  of  material 

matter  of  law  for  the  court  in  any  facts  by  the  mere  fact  that  it  was 

case  where  inquiry  is  not  foreclosed  due   to    his    ignorance   or    mistake, 

by  express  or  implied  stipulations];  He  must  disclose  facts  not  only  of 

Fidelity  &  Gas.  Co.  v.  Alpert,  14  C.  which  he  has  actual  knowledge,  but 

C.  A.  474,  67  Fed.  460    (1895).     In  those    of    which    the    law    requires 

Reynolds  v.  Atlas  Ace.  Ins.  Co.,  69  him  to  have  knowledge.    Hence,   if 

Minn.  93,  the  question  of  materiality  the  fact  is  one  which  comes  within 

was  taken  from  the  jury  and  deter-  the  scope  of  this  rule,  and  is  not 

mined  as  a  question  of  law.  disclosed  to  the  insurer,  the  policy 

31  See  §  82,  supra;  Penn  Mut.  L.  can  not  be  enforced,  although  the 

Ins.  Co.  v.  Mechanics',  etc.,  Co.,  72  failure  to  disclose  it  was  due  to  his 

Fed.  413,  19  C.  C.  A.  286  (1896).  negligence   or   mistake,   or    was   a 
6 — ELLIOTT  INS. 


§    92  MATTERS   VOIDING    CONTRACT.  82 

The  logical  rule,  that  which  is  consistent  with  the  doctrine  upon 
which  the  law  of  concealment  rests — that  of  an  implied  condition, — is 
that  even  an  innocent  non-disclosure  of  a  material  fact  will  vitiate 
the  policy  unless  there  are  specific  inquiries  under  circumstances  from 
which  it  will  be  presumed  that  the  insured  has  waived  further  in- 
formation. 

§  92.  Concealment  or  misrepresentation  by  agent. — Every  prin- 
ciple of  good  faith  and  fair  dealing  forbids  even  an  innocent  principal 
from  taking  advantage  of  the  fraud  of  his  agent.  An  agent  for  ef- 
fecting insurance  must,  therefore,  be  held  to  bind  his  principal  by  the 
consequences  of  his  misrepresentation  or  concealment.34  The  same 
principle  requires  that  the  knowledge  of  the  agent  acquired  in  the 
course  of  the  transaction  shall  be  treated  as  the  knowledge  of  the 
principal.35  This  rule,  with  its  limitations,  is  well  illustrated  by 
certain  English  cases  dealing  with  marine  insurance.  In  an  early 
case36  an  agent  of  the  insured  was  employed  to  ship  a  cargo  of  oats, 
and  to  communicate  the  fact  of  shipment  to  another  agent,  who  was 
to  effect  an  insurance  on  the  cargo.  The  former  neglected  to  notify 
the  latter  of  the  loss  of  the  ship,  and  the  insurance  was  held  invali- 
dated. 

Ashhurst,  J.,  said:  "On  general  principles  of  policy  the  act  of 
the  agent  ought  to  bind  the  principal,  because  it  must  be  taken  for 
granted  that  the  principal  knows  whatever  the  agent  knows;  and 
there  is  no  hardship  on  the  plaintiff,  for,  if  the  fact  had  been  known 
the  policy  could  not  have  been  effected." 

In  another  case37  it  appeared  that  the  master  did  not  notify  the 
owner  that  the  ship  had  been  lost;  and  the  owner,  in  ignorance  of 
the  fact,  effected  an  insurance  on  the  ship  by  a  policy  "lost  or  not 
lost."  It  was  held  that  the  captain  was  bound  to  communicate  the 
fact  to  the  owner  and  that  there  could  be  no  recovery  on  the  policy, 

mere  accident:  Weigle  v.  Cascade  3o  (1813).  The  loss  resulted  from 

F.  &  M.  Ins.  Co.,  12  Wash.  449,  41  the  fact  thus  concealed.  The  pol- 

Pac.  53  (1895).  icy  was  not  void,  as  the  insured 

34  National  L.  Ins.  Co.  v.  Minch,  53  was  allowed  to  recover  back  the 

N.  Y.  144  (1873).  premium.  See  comments  on  this 

"Clement  v.  Phenix  Ins.  Co.,  6  case  in  Stribley  v.  Imperial  Mar. 

Blatchf.  (C.  C.)  481  (1869).  Ins.  Co.,  L.  R.  1  Q.  B.  Div.  507 

"Fitzherbert  v.  Mather,  1  Term  (1876).  The  case  is  criticised  in 

R.  12  (1785).  Blackburn  v.  Vigors,  L.  R.  12  App. 

""Gladstone  v.  King,  1  Maule  &  S.  Cas.  531  (1887). 


83  NON-DISCLOSURE    OF   MATERIAL   PACTS.  §    93 

although  there  was  no  fraud.  In  a  case  where  it  appeared  that  at  the 
time  of  the  insurance  the  agent  of  the  owner  knew  that  the  ship  had 
been  lost,  the  court  said:38  "The  question  arises  whether  the  plaint- 
iff, the  assured,  is  so  far  affected  hy  the  knowledge  of  the  agent  of 
the  loss  of  the  vessel  or  damage  to  the  cargoes  that  the  fraud  thus 
committed  on  the  underwriters  through  the  intentional  concealment 
of  the  agent,  though  innocently  committed,  so  far  as  the  plaintiff  is 
concerned,  will  afford  a  defense  to  the  underwriter  on  a  claim  to  en- 
force the  policy."  Chief  Justice  Cockburn  said  that  "if  an  agent 
whose  duty  it  is,  in  the  ordinary  course  of  business,  to  communicate 
information  to  his  principal  as  to  the  state  of  the  ship  or  cargo,  omits, 
to  discharge  such  duty,  or  the  owner,  in  the  absence  of  information 
as  to  any  fact  material  to  be  communicated  to  the  underwriter,  effects 
an  insurance,  such  insurance  will  be  void,  on  the  ground  of  conceal- 
ment or  misrepresentation.  The  insurer  is  entitled  to  assume  as  the 
basis  of  the  contract  between  him  and  the  assured  that  the  latter  will 
communicate  to  him  every  material  fact  of  which  the  assured  has  or 
in  the  ordinary  course  of  business  ought  to  have  knowledge ;  and  that 
the  latter  will  take  the  necessary  measures,  by  the  employment  of 
competent  and  honest  agents,  to  obtain,  through  the  ordinary  channels 
of  intelligence  in  use  in  the  commercial  world,  all  due  information  as 
to  the  subject-matter  of  the  insurance.  This  condition  is  not  com- 
plied with  where,  by  the  fraud  or  negligence  of  the  agent,  the  party 
proposing  the  insurance  is  kept  in  ignorance  of  a  material  fact  which 
ought  to  have  been  made  known  to  the  underwriter,  and  through 
such  ignorance  fails  to  disclose  it/' 

§  93.  Knowledge  of  the  agent,  continued. — In  a  well-known  case89 
it  appeared  that  the  owner  of  an  overdue  vessel  instructed  A  to  procure 
insurance,  but  he  was  unable  to  do  so  and  so  informed  the  owner. 
The  same  instructions  were  then  given  to  B,  with  the  same  results. 
Another  agent  then  secured  the  insurance.  The  vessel  had  been  al- 
ready lost,  and  the  fact  was  known  to  B  while  he  was  attempting  to 
secure  the  insurance.  He  did  not  communicate  the  fact  to  the  owner 
or  to  C,  and  both  were  ignorant  of  the  loss  when  the  insurance  was 
effected.  The  court  of  appeals  held  that  there  could  be  no  recovery 
upon  the  policy,  as  the  knowledge  of  the  agent  B  must  be  imputed  to 

M  Proudfoot  v.  Montefiore,  L.  R.  2  30  Blackburn  v.  Vigors,  L.  R.  17 
Q.  B.  511  (1867).  Q.  B.  D.  553,  55  L.  J.  Q.  B.  (N.  S.) 

347   (1886). 


§    93  MATTERS    VOIDING    CONTRACT.  84 

the  owner.  The  court  below  had  ordered  judgment  for  the  plaintiff 
on  the  theory  that  as  B,  who  had  acquired  the  knowledge,  was  not  the 
agent  through  whom  the  insurance  was  effected,  his  knowledge  could 
not  be  imputed  to  the  owner.  This  view  was  adopted  by  the  master 
of  the  rolls  in  the  court  of  appeals,  who  said:  "I  am  prepared  to 
decide  this  case  upon  the  old,  simple,  recognized  and  easily  justified 
rule  that  a  contract  of  insurance  is  rendered  void  by  an  innocent  mis- 
representation or  concealment  of  a  material  fact  known  to  the  assured, 
or  to  an  agent  of  his,  by  or  through  whom  the  contract  is  made,  and 
which  fact  the  underwriter  neither  knows  nor  is  bound  to  know;  but 
is  not  rendered  abortive  by  the  misrepresentation  or  concealment  of 
any  other  person  or  agent,  whether  innocent  or  fraudulent." 

The  majority  of  the  court  held  that  it  was  the  duty  of  the  agent 
who  acquired  the  information  to  communicate  it  to  his  principal. 
Lord  Justice  Lindley  said:  "It  appears  to  me  to  be  established  that 
in  order  to  prevent  fraud  and  willful  ignorance  on  the  part  of  per- 
sons effecting  insurance,  no  policy  can  be  enforced  by  an  assured  who 
has  been  deliberately  kept  in  ignorance  of  material  facts  by  soine  one 
whose  moral,  if  not  legal,  duty  it  was  to  inform  him  of  them ;  and  he 
has  been  kept  in  such  ignorance  purposely  in  order  that  he  might  be 
able  to  effect  the  insurance  without  disclosing  these  facts.  *  *  * 
It  is  a  condition  of  the  contract  that  there  is  no  misrepresentation  or 
concealment  either  by  the  assured  or  by  any  one  who  ought,  as  a  mat- 
ter of  business  or  fair  dealing,  to  have  stated  or  disclosed  the  facts  to 
him  or  to  the  underwriter  for  him." 

But  the  house  of  lords  reversed  this  decision,  and  permitted  the 
plaintiff  to  recover.40  Lord  Watson  said  that  "the  responsibility  of 
an  innocent  insured  for  the  non-communication  of  facts  which  happen 
to  be  within  the  private  knowledge  of  persons  whom  he  merely 
employs  to  obtain  an  insurance  upon  a  particular  risk  ought  not  to  be 
carried  beyond  the  person  who  actually  makes  the  contract  on  his 
behalf.  There  is  no  authority  whatever  for  enlarging  his  respon- 
sibility beyond  that  limit,  unless  it  is  to  be  found  in  the  decisions 
which  relate  to  captains  and  ship  agents;  and  these  do  not  appear  to 
me  to  have  any  analogy  to  the  case  of  agents  employed  to  effect  a 
policy.  There  is  a  material  difference  in  the  relations  of  these  two 
classes  of  agents  to  their  employers.  The  one  class  is  specially  em- 
ployed for  the  purpose  of  communicating  to  him  the  very  facts  which 

40  Blackburn   v.    Vigors,    L.    R.    12  App.  Gas.  531  (1887). 


85  NON-DISCLOSURE    OF    MATERIAL    FACTS.  §    93 

the  law  requires  him  to  divulge  to  his  insurer;  the  other  is  employed, 
not  to  procure  or  furnish  information  concerning  the  ship,  but  to 
effect  an  insurance.  *  *  *  It  can  not  be  reasonably  suggested 
that  the  insurer  relies  to  any  extent  upon  the  private  information 
possessed  by  persons  of  whose  existence  he  presumably  knows  noth- 
ing." 

Lord  Macnaughton  said  that  it  would  "be  a  dangerous  extension 
of  the  doctrine  of  constructive  notice  to  hold  that  persons  who  are 
themselves  absolutely  innocent  of  any  concealment  or  misrepresenta- 
tion, and  who  have  not  willfully  shut  their  eyes  or  closed  their  ears  to 
any  means  of  information,  are  to  be  affected  with  the  knowledge  of 
matters  which  other  persons  may  be  morally,  though  not  legally, 
bound  to  communicate  to  them/' 

A  distinction  is  here  made  between  an  agent  to  insure  and  an  agent 
as  the  master  of  a  ship.  Mr.  Justice  Story  held  that  when  the  owner, 
at  the  time  of  procuring  the  insurance,  had  no  knowledge  of  the  loss, 
but  acted  with  entire  good  faith,  he  was  not  precluded  from  recover- 
ing, and  that  the  policy  was  not  rendered  void  by  the  omission  of  the 
master  to  communicate  intelligence  of  the  loss,  although  such  omis- 
sion was  willful  and  fraudulent.41 

"Ruggles  v.  General  Interest  Ins.  Co.,  4  Mason  (C.  C.)  74  (1825). 


CHAPTER  VI. 


REPRESENTATIONS    AND    WARRANTIES. 


SEC. 

100.  Statutory  modifications. 

101.  Representations — Definition. 

102.  Warranties  distinguished  from 

representations. 

103.  Affirmative      and      promissory 

warranties. 

104.  Effect  of  breach  of  warranty. 

105.  Construction  of  statements  in 

the  application. 

106.  Application  made  part  of  the 

policy. 

107.  Construction. 

108.  Oral  representations. 

108a.  Mistake — Good  faith  answer. 

109.  Statement  of  expectation  or  be- 

lief. 

110.  Affirmative  and  promissory  rep- 

resentations   —    Continuing 
warranties. 


SEC. 

111.  Oral     promissory     representa- 

tions. 

112.  Conclusion. 

113.  Misrepresentation  by  agent. 

114.  Effect  of  misrepresentation. 

115.  Substantial  truth  required. 

116.  Test  of  materiality. 

117.  Materiality — Opinion      of      ex- 

perts. 

118.  Burden  of  proof. 

119.  Statutory  provisions. 

120.  The  Massachusetts  statute. 

121.  The  Pennsylvania  statute. 

122.  Similar    provisions    in    other 

states. 

123.  Controlling  force  of  such  stat- 

utes. 


§  100.  Statutory  modifications. — The  importance  of  technical  war- 
ranties has  been  considerably  diminished  by  the  enactment  of  statutes 
that  require  them  to  be  construed  for  all  practical  purposes  as  though 
they  were  common-law  representations.  Thus,  in  a  number  of  states 
it  is  provided  that  no  oral  or  written  misrepresentation  made  in  the 
negotiation  of  a  contract  or  policy  of  insurance  by  the  insured,  or  in 
his  behalf,  shall  be  deemed  material  or  defeat  or  render  void  the 
policy  or  prevent  its  attaching  unless  such  representation  is  made 
with  actual  intent  to  deceive,  or  unless  such  misrepresentation  in- 
creases the  risk  of  loss.  Although  such  statutes  in  terms  refer  only 
to  misrepresentations,  they  apply  to  all  contracts  of  insurance,  and  to 
warranties  as  well  as  representations.1 

1  See  §  119,  infra. 
(86) 


87  REPRESENTATIONS   AND   WARRANTIES.  §    101 

§  101.  Representations — Definition. — A  statement  made  by  the  ap- 
plicant for  insurance  pending  the  negotiations  relative  to  some  fact 
having  reference  thereto,  and  upon  the  faith  of  which  the  contract  is 
entered  into,  is  called  a  representation.  It  may  be  verbal  or  written, 
and  is  made  before  the  issuance  of  the  policy  with  reference  to  some 
fact  which,  by  apparently  diminishing  the  risk,  may  tend  to  induce 
the  insurer  to  more  readily  assume  the  risk,  or  to  assume  it  at  a 
lesser  rate  of  premium.  Such  representations  are  not,  strictly  speak- 
ing, a  part  of  the  contract  of  insurance  or  of  the  essence  of  it,  but 
are  something  collateral  or  preliminary  thereto  or  in  the  nature  of  an 
inducement.2 

§  102.  Warranties  distinguished  from  representations. — When  a 
representation  made  by  an  applicant  for  insurance  is  carried  into  the 
contract  and  made  a  part  thereof,  it  becomes  a  warranty,  and  the 
question  of  its  materiality  is  thus  settled  by  the  contract  of  the  par- 
ties. A  warranty  at  common  law  is  defined  as  a  stipulation  or  state- 
ment inserted  or  referred  to  in,  and  made  a  part  of  the  insurance 
contract,  upon  the  truth  or  performance  of  which  the  validity  of  the 
contract  depends.3  A  representation  is  never  a  part  of  the  contract  of 
insurance,  while  a  warranty  must  be  inserted  in  the  written  contract 
in  such  a  manner  as  to  make  it  a  part  thereof.4  It  may  be  written 
upon  the  margin  of  the  policy,5  but  a  mere  reference  therein  to  an- 
other paper,  unless  such  paper  is  referred  to  and  made  a  part  of  the 
policy,  is  not  sufficient.6 

'Alabama  Gold  L.  Ins.  Co.  v.  376,  33  N.  E.  105  (1892).  As  to 
Johnston,  80  Ala.  467  (1886);  Paw-  what  language  amounts  to  a  war- 
son  v.  Watson,  2  Cowp.  785,  13  Eng.  ranty,  see  Daniels  v.  Hudson  River, 
Rul.  Gas.  540  (1778).  Duer  (Vol.  2  etc.,  Ins.  Co.,  12  Gush.  (Mass.)  416, 
(ed.  1846),  p.  644)  claims  that  a  59  Am.  Dec.  192  (1853). 
positive  representation  is  not  col-  B  Patch  v.  Phoenix,  etc.,  Ins.  Co., 
lateral  to  but  a  part  of  the  contract.  44  Vt.  481  (1872);  McLaughlin  v. 
In  line  with  this  view  is  Ellis  In-  Atlantic  Mut.  Ins.  Co.,  57  Me.  170 
surance  29.  (1869). 

8  Ripley  v.  ^Etna  Ins.  Co.,  30  N.  Y.  8  Houghton  v.  Manufacturers',  etc., 

136  (1864).  Ins.  Co.,  8  Mete.  (Mass.)  114  (1844); 

*  Lord   Mansfield     in    Pawson    v.  ^Etna  Ins.  Co.  v.  Grube,  6  Minn.  82, 

Watson,  2  Cowp.  785,  13  Eng.  Rul.  Gil.   32    (1861).     As  to  meaning  of 

Cas.  540   (1778);  Wheaton  v.  North  "indorsed,"  etc.,  see  Reynolds  v.  At- 

British,  etc.,  Ins.  Co.,  76  Cal.  415,  9  las,  etc.,  Ins.  Co.,  69  Minn.  93,  71  N. 

Am.  St.  216   (1888);   Standard  L.  &  W.  831  (1897). 
Ace.    Ins.   Co.   v.   Martin,   133    Ind. 


§    103  MATTERS   VOIDING    CONTRACT.  88 

The  supreme  court  of  Minnesota,  in  an  early  case,  thus  stated 
the  distinction  between  warranties  and  representations:7  "'An  ex- 
press warranty  in  the  law  of  insurance  is  a  stipulation  inserted  in 
writing  upon  the  face  of  the  policy,  on  the  literal  truth  or  fulfillment 
of  which  the  validity  of  the  entire  contract  depends.  The  stipula- 
tion is  considered  to  be  on  the  face  of  the  policy,  although  it  may  be 
written  in  the  margin  or  transversely,  or  on  a  subjoined  paper  re- 
ferred to  in  the  policy.'73-  A  representation,  as  distinguished  from  a 
warranty  in  the  law  of  insurance,  is  'a.  verbal  or  written  statement 
made  by  the  assured  to  the  underwriter,  before  the  subscription  of 
the  policy,  as  to  the  existence  of  some  fact  or  state  of  facts  tending  to 
induce  the  underwriter  more  readily  to  assume  the  risk  by  dimin- 
ishing the  estimate  he  would  otherwise  have  formed  of  it.'7b  In  the 
law  of  insurance  a  warranty  is  always  a  part  of  the  contract  —  a  con- 
dition precedent  upon  the  fulfillment  of  which  its  validity  depends. 
A  representation,  on  the  other  hand,  is  not  a  part  of  the  contract,  but 
is  collateral  to  it.8  The  essential,  difference  between  a  warranty  and 
a  representation  is  that  in  the  former  it  must  be  literally  fulfilled, 
or  there  is  no  contract,  the  parties  having  stipulated  that  the  subject 
of  the  warranty  is  material  and  closed  all  inquiry  concerning  it;  while 
in  the  latter,  if  the  representation  prove  to  be  untrue,  still,  if  it  is  not 
material  to  the  risk,  the  contract  is  not  avoided."9 

§  103.  Affirmative  and  promissory  warranties.  —  A  warranty  may 
be  either  affirmative  or  promissory,  the  former  affirming  the  existence 
of  certain  facts  at  the  time  of  the  insurance,  and  the  latter  requiring 
the  performance  or  the  omission  of  certain  things  after  the  taking 
out  of  the  insurance.10  This  is  illustrated  by  a  recent  case  in  the 
circuit  court  of  appeals.11  A  policy  insuring  against  loss  through 


Ins.  Co.  v.  Grube,  6  Minn.  21  Conn.  19,  54  Am.  Dec.  309  (1851), 

82,  Gil.  32  (18t>i).  it  was  said:     "The  former  precedes 

'a  Quoting  Angell  Ins.,  §  140,  note,  and  is  no  part  of  the  contract  of  in- 

7b  Quoting  Angell  Ins.,  §  147.  surance,   and  need  to  be  only  ma- 

8  Missouri,  etc.,  Trust  Co.  v.  Ger-  terially  true;  the  latter  is  a  part  of 

man  Nat'l  Bank,  77  Fed  117,  23  C.  the  contract  and  policy,  and  must 

C.  A.  65  (1896).  be  exactly  and  literally  fulfilled,  or 

•See  Mutual  Ben.  L.   Ins.   Co.  v.  else  the  contract  is  broken  and  the 

Robison,  58  Fed.  723,  7  C.  C.  A.  444,  policy  becomes  void." 

22    L.   R.   A.    325    (1893);    Cobb    v.  I0  Blumer  v.   Phoenix  Ins.  Co.,   45 

Covenant,  etc.,  Ass'n,  153  Mass.  176,  \Vis.  622  (1878). 

25  Am.  St.  619  (1891).     In  Glendale  "Hunt   v.   Fidelity,    etc.,    Co.,   99 

Woolen  Co.  v.  Protection  Ins.  Co.,  Fed.  242,  30  C.  C.  A.  496  (1900). 


89  REPRESENTATIONS   AND    WARRANTIES.  §    104 

the  embezzlement  of  an  agent  was  issued  upon  an  application  signed 
by  the  applicant  which  contained  answers  to  questions  rela- 
tive to  the  subject-matter  of  the  policy.  These  statements  were,  by 
the  terms  of  the  policy,  "to  constitute  an  essential  part  and  form  the 
basis  of  the  contract."  The  declaration  also  stated  that  the  answers 
were  true  to  the  best  of  the  knowledge  and  belief  of  the  assured,  and 
were  to  be  taken  as  the  basis  of  the  contract  between  the  parties. 

It  was  also  stated  that  monthly  comparisons  were  made  of  the 
money  in  the  hands  of  the  agent,  with  the  accounts  and  vouchers.  It 
was  held  that  this  was  a  warranty,  and  that  the  statement  was  not 
qualified  by  the  statement  that  the  answers  were  true  "to  the  best  of 
the  knowledge  and  belief"  of  the  applicant.  Judge  Wallace  said: 
"This,  at  all  events,  is  a  promise  that  either  at  the  New  York  office, 
or  at  its  general  office,  or  at  some  other  place,  the  assured  would  at- 
tempt to  make  a  monthly  examination  in  order  to  ascertain  whether 
the  money  in  its  agent's  hands  corresponded  with  the  balance  which 
should  be  there,  according  to  his  accounts.  The  promissory  state- 
ment, having  been  made  part  of  the  contract  between  the  parties,  by 
the  terms  both  of  the  policy  and  the  declaration,  was  in  effect  a  war- 
ranty, which  the  insured  was  bound  to  fulfill  in  substance  and  ac- 
cording to  its  meaning.12  It  is  quite  immaterial  that  the  statement  is 
not  called  a  warranty.  It  is  a  stipulation  embodied  in  the  contract, 
by  the  words  of  the  policy,  for  the  performance  of  future  acts,  and  as 
such  is  an  express  warranty." 

§  104.  Effect  of  breach  of  warranty. — At  common  law  the  effect 
of  a  warranty  is  to  make  void  the  policy  if  the  statements  are  not 
literally  true,  or  if  the  stipulations  are  not  fully  observed  without 
reference  to  their  materiality  or  the  willfulness  of  the  non-observance 
or  cause  of  the  loss.13  The  rule  was  thus  stated  by  Chief  Justice 
Shaw:14  "If  any  statement  of  fact,  however  unimportant  it  may 

12  Jeffries  v.  Life  Ins.  Co.,  22  Wall.  Mass.  176,  10  L.  R.  A.  666  (1891); 

(U.  S.)  47,  53  (1874);  Brady  v.  Price  v.  Phoenix  Mut.  Ins.  Co.,  17 

United  L.  Ins.  Ass'n,  60  Fed.  727,  9  Minn.  497,  Gil.  473  (1871);  ^tna 

C.  C.  A.  252  (1894);  Missouri,  etc.,  L.  Ins.  Co.  v.  France,  91  U.  S.  510 

Trust  Co.  v.  German  Nat'l  Bank,  77  (lo,«).  As  to  modifications  by 

Fed.  117,  23  C.  C.  A.  65  (1896).  statute,  see  §  119,  infra. 

14  Campbell  v.  New  England,  etc.,  14  Daniels  v.  Hudson  River  F.  Ins. 

Ins.  Co.,  98  Mass.  381  (1867);  Cobb  Co.,  12  Gush.  (Mass.)  416  (1853). 
v.  Covenant  Mut.  Ben.  Ass'n,  153 


§    105  MATTERS   VOIDING    CONTRACT.  90 

have  been  regarded  by  both  parties  to  the  contract,  is  a  warranty,  and 
it  happens  to  be  untrue,  it  avoids  the  policy ;  if  it  be  construed  a  rep- 
resentation, and  is  untrue,  it  does  not  avoid  the  contract  if  not  willful, 
or  if  not  material.  To  illustrate  this:  The  application,  in  answer 
to  an  interrogatory,  states,  'Ashes  are  taken  up  and  removed  in  iron 
hods/  Whereas,  it  should  turn  out  in  evidence  that  ashes  are  re- 
moved and  taken  up  in  copper  hods,  perhaps  a  set  recently  obtained, 
and  unknown  to  the  owner.  If  this  was  a  warranty,  the  policy  is 
gone,  but,  if  a  representation,  it  would  not,  we  presume,  affect  the 
policy,  because  not  willful  or  designed  to  deceive ;  but  more  especially 
because  it  would  be  utterly  immaterial,  and  would  not  have  influenced 
the  mind  of  either  party  in  making  the  contract  or  fixing  its  terms." 

§  105.  Construction  of  statements  in  the  application. — The  state- 
ments contained  in  the  application  for  insurance  will  be  regarded 
as  representations  unless  they  are  in  express  terms  made  a  part  of 
the  contract  of  insurance  and  warranted  to  be  true.  Where  the  ap- 
plication contains  certain  statements  which  are  certified  to  be  true, 
but  are  not  referred  to  in  the  contract,  they  are  considered  as  rep- 
resentations, and  invalidate  the  contract  only  when  false  and  ma- 
terial.15 

§  106.  Application  made  part  of  the  policy. — An  insurance  com- 
pany, in  taking  risks  upon  lives  or  property,  has  the  right  to  deter- 
mine the  conditions  upon  which  it  will  issue  a  policy  and  to  insist 
upon  their  literal  fulfillment.  When  these  conditions  are  expressed 
in,  and  made  a  part  of  the  written  contract,  their  materiality  is  not 
open  to  question.  In  such  cases  the  intention  of  the  parties  is  to  be 
gathered  from  the  terms  of  the  contract.  The  statements  of  the  in- 
sured may  be  thus  incorporated  as  the  conditions  on  which  the  insur-v 
ance  is  undertaken,  and  when  thus  made  the  basis  of  the  contract,  if 
untrue,  will  render  it  invalid.16  Statements  made  in  the  applica- 
tion are  primarily  representations  unless  made  warranties  by  being 
incorporated  into  the  contract.  The  modern  practice,  made  com- 
pulsory by  statute  in  some  states,168-  is  to  attach  a  copy  of  the  applica- 
tion to  the  policy  and  to  refer  thereto  by  appropriate  language  in  the 

15  Fidelity  &  Cas.  Co.  v.  Alpert,  67  18  Standard,  etc.,  Ins.  Co.  v.  Mar- 
Fed.   460,   14   C.   C.  A.   474    (1895);  tin,  133  Ind.  376   (1892). 
McVey  v.  Grand  Lodge,  53  N.  J.  L.  16a  See  Corson  v.  Anchor,  etc.,  Ins. 
17,  20  Atl.  873   (1890).  Co.   (Iowa),  85  N.  W.  806    (1901). 


91  REPRESENTATIONS   AND    WARRANTIES.  §    107 

policy.  The  two  papers  thereupon  constitute  the  written  agreement 
of  insurance,  and  must  be  construed  together  as  containing  the  condi- 
tions, clauses  and  stipulations  upon  which  the  insurance  is  made. 
This  rule  was  applied  where  the  application  provided  that  the  an- 
swers and  statements  in  the  application  were  warranted  to  be  "full, 
complete  and  true,"  and  if  there  not  so,  the  policy  issued  thereon 
shall  be  "null  and  void,"  and  that  the  answers  are  a  part  of  the  pol- 
icy. In  this  case  the  application  was  not  attached  to  the  policy,  but 
the  policy  contained  a  clause  to  the  effect  that,  "in  consideration  of 
the  answers,  statements  and  agreements  contained  in  the  application 
for  this  policy  of  insurance,  which  are  hereby  made  a  part  of  this 
contract."17  But  a  mere  general  reference  in  a  policy  to  the  applica- 
tion will  not  give  its  statements  the  effect  of  warranties.18  Warran- 
ties will  not  be  created  by  implication,  and  if  it  is  the  intention 
that  statements  shall  be  warranties,  there  must  be  no  ambiguity  or 
uncertainty  in  the  language  used  to  express  such  intention.19  It  has 
been  held  that  a  mere  provision  in  a  policy  whereby  the  application 
is  made  a  part  of  the  policy  is  not  sufficient  to  make  its  statements  and 
representations  warranties.20 

§  107.  Construction. — The  courts  do  not  look  with  favor  upon  a 
strict  technical  warranty,  and,  while  recognizing  the  right  of  the 
parties  to  say  that  matters  immaterial  in  fact  shall  be  regarded  as 
material  for  the  purpose  of  a  particular  contract,  will  not  assume 
that  such  was  their  intention  unless  it  is  made  clearly  to  appear  by 
the  terms  of  the  contract.21  The  rules  governing  representations  are 

17  Fidelity  &  Cas.  Co.  v.  Alpert,  67     truth  would  be  for  the  jury  to  de- 
Fed.   460,   14   C.   C.  A.   474    (1895);     termine,  although  specific  inquiries 
Alabama  Gold  L.  Ins.  Co.  v.  Garner,     had  been  made. 

77  Ala.  215    (1885);   National  Bank  21  Daniels  v.  Hudson  River  F.  Ins. 

v.  Ins.  Co.,  95  U.  S.  673   (1877).  Co.,   12   Gush.    (Mass.)    416    (1853); 

18  Jefferson  Ins.  Co.  v.  Cotheal,  7  National  Bank  v.  Insurance  Co.,  95 
Wend.   (N.  Y.)  72,  22  Am.  Dec.  567  U.    S.    673     (1877);    Commonwealth 
(1831).  Mut.  F.  Ins.  Co.  v.  Huntzinger,  98 

"Moulor  v.  American  L.  Ins.  Co.,  Pa.  St.  41  (1881);  Fitch  v.  Amer- 
111  U.  S.  335  (1883);  Supreme  ican,  etc.,  Ins.  Co.,  59  N.  Y.  557,  17 
Council  v.  Brashears,  89  Md.  624,  73  Am.  Rep.  372  (1875).  For  a  state- 
Am.  St.  244  (1899).  ment  of  the  rules  of  construction  of 

20  Supreme   Council   v.   Brashears,  insurance  contracts,  see  Alabama  G. 

89  Md.  624,  73  Am.  St.  244   (1899).  L.  Ins.  Co.  v.  Johnston,  80  Ala.  467, 

In  this  case  the  court  said  that  the  2  So.  125  (1886). 
question  of  materiality  as  well  as 


107 


MATTERS   VOIDING    CONTRACT. 


fair  and  equitable,  and  in  all  cases  of  ambiguity  it  will  be  presumed 
that  the  parties  intended  that  the  questions  of  good  faith  and  ma^ 
teriality  shall  be  determined  as  questions  of  fact.  Even  stipulations 
in  the  policy  in  the  form  of  a  warranty  are  often  given  no  greater 
effect  than  representations.  A  technical  representation  can  not  be  a 
part  of  the  contract,  but  there  is  no  rule  of  law  which  will  prevent 
the  parties  from  inserting  statements  in  the  contract  which  shall  be 
given  the  force  and  effect  only  of  a  representation.22  The  mere  use 
of  the  word  warranty  with  reference  to  the  statements  made  by  the 
insured  is  not  conclusive  that  such  statements  are  to  be  treated  as 
warranties  in  the  strict  legal  sense.  It  is  said  by  the  supreme  court 
of  Michigan:23  "In  construing  warranties  contained  in  policies  of 
insurance  it  may  be  asserted  that  the  prime  object  to  be  reached  is  the 
intention  of  the  parties,  and  if  that  can  be  found,  such  intention  must 
control.  The  rules  in  the  interpretation  of  such  warranties  are  the 
same  as  those  which  apply  to  the  interpretation  of  other  mercantile 
contracts.  All  written  instruments,  where  the  provisions  are  clear 
and  unambiguous,  are  entitled  to  a  literal  interpretation;  and  wher- 
ever in  a  contract  of  insurance  there  is  a  clear  breach  of  a  warranty 


22  National    Bank    v.    Union    Ins. 
Co.,  88  Cal.  497,  26  Pac.  509   (1891). 

23  Hoose   v.   Prescott   Ins.    Co.,    84 
Mich.    309,    47    N.    W.     587     (1890). 
Warranties    are    never    created     by 
construction:     Jefferson  Ins.  Co.  v. 
Cotheal,  7  Wend.  (N.  Y.)  72,  22  Am. 
Dec.    571    (1831);    Duncan    v.     Sun 
Fire  Ins.  Co.,  6    Wend.  (N.  Y.)  494 
(1831).     In  McGannon  v.  Michigan, 
etc.,  Ins.  Co.    (Mich.),  87  N.  W.  61 
(1901),  it  was  said:     "On  the  part 
of  the  plaintiff  it  is  said  the  agree- 
ment to  keep  a  watchman  is  a  prom- 
issory  agreement,   and   not  a   war- 
ranty,   the    literal    observance    of 
which  is  necessary  to  keep  the  pol- 
icy in  force,  inasmuch  as  there  is 
no  express  provision  in  the  policy 
that  a  failure  to  keep  a  watchman  at 
all  times  shall  make  the  policy  void. 
The  authorities  upon  these  several 
propositions   are    very    conflicting. 
The  old  rule  as  to  warranties  fully 


sustains  the  contention  of  counsel 
for  defendant,  but  there  has  been  a 
tendency  of  late  years  to  hold  that 
the  substantial  fulfillment  of  an 
agreement  like  that  contained  in  the 
application  is  sufficient.  In  May  Ins., 
§  156,  it  is  said,  after  the  language 
before  quoted:  'A  learned  judge 
and  author  declares  it  to  be  unfor- 
tunate that  so  strict  a  rule  has  been 
established,  and  intimates — what  is 
no  doubt  entirely  true — that  courts 
are  not  at  all  inclined  to  go  beyond 
the  precedents  to  support  a  war- 
ranty. There  are  even  authorities 
to  the  effect  that  in  dealing  with 
warranties  common  sense  is  not  to 
be  lost  sight  of,  and  that  the  fair, 
practical  intent  of  the  parties  is  to 
be  sought,  not  the  hair-splitting  of 
a  college  of  wit  crackers,  and  that 
substantial  fulfillment  of  a  warranty 
is  enough.' " 


93  REPRESENTATIONS   AND    WARRANTIES.  §    108 

contained  therein,  however  immaterial  it  may  be,  the  policy  will  be 
avoided.  It  may  be  said  that  the  warranties  contained  in  the  policy 
are  somewhat  different  from  representations  made,  in  this,  that  while 
a  representation  may  be  satisfied  with  a  substantial  or  even  an  equi- 
table compliance,  a  warranty  requires  a  strict  and  literal  fulfillment." 
The  language  must  be  given  a  reasonable  construction  in  view  of  the 
purposes  of  the  provision  under  consideration.24  A  statement  by  the 
applicant,  in  answer  to  a  question  that  he  understands  that  untrue 
answers  will  render  the  contract  void,  will  not  control  the  construc- 
tion. "The  statements  expressing  his  understanding  of  what  will  be 
the  effect  of  the  insurance  are  statements,  not  of  fact,  but  of  law, 
and  can  not  control  the  legal  construction  of  the  policy  afterwards 
issued  and  accepted."25 

§  108.  Oral  representations. — A  representation  may  be  either 
verbal  or  written,  but  where  a  written  application  is  made,  it  will  be 
presumed  to  contain  all  representations  which  were  made  as  an  in- 
ducement to  the  contract.26 

§  108a.  Mistake — Good  faith  answer. — There  are  a  number  of 
cases  which  hold  that  the  element  of  good  faith  enters  so  far  into  the 
construction  of  statements  made  in  the  form  of  warranties  that  it  is 
enough  if  they  are  substantially  true.  In  a  well-known  case  in  the 
supreme  court  of  the  United  States  the  insured  had  warranted  "that 
the  above  are  fair  and  true  answers/'  In  fact,  the  application  con- 
tained the  untrue  statement  that  the  applicant  had  not  been  afflicted 
with  a  certain  disease.  The  court,  Mr.  Justice  Harlan,  said  :27  "The 
entire  argument  on  behalf  of  the  company  proceeds  upon  the  too 
literal  interpretation  of  those  clauses  in  the  policy  and  application 
which  declare  the  contract  null  and  void  if  the  answers  of  the  insured 

14  See  note  to  Fowler  v.  ^Etna  P.  Mowry,    96    U.    S.    544    (1887).     Ex- 
Ins.  Co.,  6  Cow.  (N.  Y.)  673,  16  Am.  ecutory    verbal    contract    made    at 
Dec.  466    (1827).  the    time    written   policy   is   issued 

15  Accident  Ins.  Co.  v.  Crandal,  120  with    reference   to   the    future   can 
U.  S.  527   (1886).  not    be    shown:     Hartford    P.    Ins. 

18  Where  a  written  application  is  Co.    v.     Davenport,     37     Mich.     609 

made  the  company  has  no  right  to  (1877).     But  see  McMaster  v.  New 

rely   upon   a   verbal   representation  York  L.  Ins.  Co.  (U.  S.),  22  Sup.  Ct. 

made  to  its  agent:     Dolliver  v.  St.  10   (1901). 

Joseph,  etc.,  Ins.  Co.,  131  Mass.  39  CT  Moulor  v.  American  L.  Ins.  Co., 

(1880).     Previous  verbal  statements  111  U.  S.  335  (1883). 
merged  in  the  policy:     Ins.  Co.  v. 


§    109  MATTERS   VOIDING    CONTRACT.  94 

to  the  questions  propounded  to  him  were  in  any  respect  untrue.  What 
was  meant  by  'true'  and  'untrue'  answers?  In  one  sense,  that  only 
is  true  which  is  conformable  with  the  actual  state  of  things.  In  that 
sense  a  statement  is  untrue  which  does  not  express  things  exactly  as 
they  are,  but  in  another  and  broader  sense  the  word  'true'  is  often 
used  as  a  synonym  of  honest,  sincere,  not  fraudulent.  Looking  at  all 
the  clauses  in  the  application  in  connection  with  the  policy,  it  is  rea- 
sonably clear — certainly  the  contrary  can  not  be  confidently  asserted — 
that  what  the  company  required  of  the  applicant  as  a  condition  pre- 
cedent to  any  binding  contract  was  that  he  would  observe  the  utmost 
good  faith  toward  it,  and  to  make  fair,  direct  and  honest  answers  to 
all  questions  without  evasion  or  fraud  and  without  suppression,  mis- 
representation or  concealment  of  facts  with  which  the  company  ought 
to  be  made  acquainted,  and  that  by  so  doing,  and  only  by  so  doing, 
would  he  be  deemed  to  have  made  'fair  and  true'  answers."  The 
effect  of  this  reasoning  was  to  make  the  answers  to  the  questions 
merely  representations. 

In  a  recent  Illinois  case28  it  was  held  that  a  statement  by  an  appli- 
cant for  insurance  that  none  of  his  brothers  were  dead  will  not,  al- 
though false,  avoid  the  policy,  unless  he  knew  it  to  be  false,  under  a 
policy  warranting  the  statements  to  be  true,  and  that  they  shall  form 
the  basis  of  any  contract  entered  into. 

In  commenting  upon  the  Moulor  case,  the  court  said:  "In  that 
case  the  untrue  statements  were  held  to  be  representations,  and  not 
warranties,  and  we  think,  on  the  same  reasoning,  the  answer  herein 
to  the  questiqn  should  be  so  held,  in  the  absence  of  proof  by  the  com- 
pany of  fraud  or  intentional  misstatement  on  the  part  of  the  insured. 
The  policy  was  not  rendered  invalid  merely  because  the  answer  proved 
to  be  false." 

§  109.  Statement  of  expectation  or  belief. — A  statement  of  ex- 
pectation or  belief,  unless  fraudulently  made,  will  not  avoid  a  policy.29 
Where  the  statement  amounts  merely  to  an  expression  of  opinion  or 

28  Globe,   etc.,   Ins.  Ass'n  v.   Wag-  tains  no  such  belief  or  expectation, 

ner,  188  111.  133,  58  N.  E.  970  (1901).  a  representation  so  as  to  avoid  the 

To  the  same  effect,  see  Fidelity,  etc.,  policy;    and    a    statement   as    to    a 

Ass'n  v.  Jeffords,  107  Fed.  402,  46  future  event  made  by  a  person  who 

C.  C.  A.  377  (1901).  has  obviously  no   control  over  the 

**  "The  mere   statement  of  belief  event  is  regarded  as  a  mere  state- 

or  expectation,  which  is  not  borne  ment  of  an  expectation."     Rule  as 

out  by  the  event,  is  not,  unless  made  stated  in  13  Eng.  Rul.  Gas.  531. 
mala  fide  by  a  person   who  enter- 


95  REPRESENTATIONS   AND    WARRANTIES.  §    110 

belief,  and  there  is  no  actual  fraud  in  inducing  the  insurer  to  enter 
into  the  contract,  it  will  not  avoid  the  policy.  But  there  is  a  clear 
distinction  between  a  case  of  this  character  and  one  where  the  insured 
intentionally  and  fraudulently  states,  as  a  matter  of  expectation  or  be- 
lief, that  which  he  then  knows  to  be  actually  untrue,30  or  where  the 
facts  within  his  knowledge  show  to  him  that  it  is  impossible  that  the 
matter  stated  by  him  as  one  of  belief  or  expectation  can  exist  or  hap- 
pen.31 Here  the  intent  to  deceive  the  insurer  is  apparent,  and  there 
is  actual  fraud,  which  vitiates  the  contract  where  the  insurer  is  misled 
or  deceived  in  acting  to  his  injury  when  he  otherwise  would  not  have 
so  acted.32  A  positive  statement  will  bind  the  applicant,  although  it 
was  based  upon  information  obtained  from  other  parties.  If  he  does 
not  wish  to  vouch  for  the  truth  of  a  statement  it  is  his  duty  to  make 
it  in  a  qualified  form,  and  disclose  the  fact  that  the  information  is 
derived  from  others,  and  that  he  does  not  vouch  for  its  accuracy.33 

§  110.  Affirmative  and  promissory  representations — Continuing 
warranties. — A  representation  is  ordinarily  of  an  existing  fact.  If  an 
existing  condition  is  required  by  the  insurer  to  be  continued  during 
the  life  of  the  contract  he  should  insert  it  in  the  contract  and  make  it 
a  condition  in  the  nature  of  a  warranty.  But  a  mere  statement  that 
a  certain  condition  exists  at  the  time  a  representation  is  made — as 
that  smoking  is  not  allowed  on  the  premises — is  not  a  stipulation  that 
it  will  continue  to  exist.34  So  a  representation  by  an  applicant  for  ac- 
cident insurance  that  he  is  a  switchman  does  not  require  him  to  re- 
main in  that  occupation  when  the  policy  contains  no  provision  against 
a  change  of  occupation.35  A  representation  that  a  force  pump  and  an 
abundance  of  water  exist  for  the  extinguishing  of  fire  is  not  an  agree- 
ment that  the  pump  shall  be  kept  in  good  condition  for  such  use.36  So, 
a  statement  in  an  application  that  a  house  is  occupied  is  descriptive 

30  Hunt  v.  Fidelity  &  Cas.  Co.,  39  Union,  etc.,  Ins.  Co.,  48  Me.  558,  77 

C.    C.    A.    496    (1900);     Bryant    v.  Am.  Dec.  244  (1860). 

Ocean  Ins.  Co.,  22  Pick.  (Mass.)  200  OT  Tidmarsh    v.   Washington,   etc., 

(1839).  Ins.  Co.,  4  Mason  (C.  C.)  439  (1827), 

81  Barber  v.  Fletcher,  1  Doug.  305,  Story,  J.;    Williams  v.   Delafield,  2 

13  Eng.  Rul.  Cas.  532   (1779);  Bow-  Caines  (N.  Y.)  329  (1805). 

den   v.   Vaughan,    10    Bast   415,    10  34  Hosford  v.  Germania  F.  Ins.  Co., 

Rev.   Rep.   340,   13   Eng.   Rul.    Cas.  127  U.  S.  399  (1888). 

533    (1808);   Anderson  v.  Pacific  F.  s5  Provident   L.    Ins.    Co.    v.    Fen- 

&  M.  Ins.  Co.,  L.  R.  7  C.  P.  65  (1872).  nell,  49  111.  180  (1868). 

88  Joyce   Ins.,   §   1904;    Herrick  v.  ^Gilliat  v.   Pawtucket,   etc.,   Ins. 


§    111  MATTERS   VOIDING    CONTRACT.  96 

only  and  is  not  a  warranty  that  it  will  be  occupied  during  the  existence 
of  the  risk.37  A  representation  that  the  property  insured  is  a  private 
dwelling-house  is  not  a  promise  that  it  will  not  be  used  for  other  pur- 
poses.38 A  statement  that  a  building  would  be  occupied  by  a  tenant 
is  a  mere  statement  of  expectation.39  The  words,  "no  stoves  used/' 
do  not  create  a  continuing  warranty  that  stoves  will  not  be  used  in 
the  future.40  So,  "ashes  are  thrown  out,"  is  not  a  continuing  war- 
ranty.41 But  a  statement  that  a  watchman  is  kept  on  the  premises 
when  a  mill  is  not  in  operation  has  been  construed  as  a  promise  that 
the  practice  will  be  continued.42  But  a  policy  may  contain  an  ex- 
press covenant  as  to  the  future,  the  breach  of  which  will  invalidate  the 
contract.43  Where  an  applicant  for  life  insurance  stated  that  he  had 
not  or  would  not  practice  any  pernicious  habits  tending  to  shorten 
life,  but  there  was  no  stipulation  that  a  violation  of  this  statement 
would  void  the  policy,  it  was  held  to  apply  only  to  an  existing  state 
of  facts,  and  that  the  statement  as  to  the  future  was  a  mere  expres- 
sion of  intention.44  The  correctness  of  this  decision  is  very  doubtful, 
and  a  contrary  decision  was  reached  by  the  federal  court  in  considering 
the  same  contract. 

§  111.  Oral  promissory  representations. — The  distinction  between 
affirmative  and  promissory  representations  is  generally  recognized 
by  the  courts  and  text  writers.  The  question  has  been  much  dis- 
cussed and  the  authorities  are  somewhat  conflicting. 

Co.,   8   R.   I.   282,   91   Am.   Dec.   229  N.  W.  61,  54  L.  R.  A.  739    (1901); 

(1866).  Hart    v.     Niagara,     etc.,     Ins.     Co. 

37 Cumberland  Valley,  etc.,  Protec-  (Wash.),  27  L.  R.  A.  86. 

tion  Co.  v.  Douglas,  58  Pa.  St.  419,  43  Houghton      v.     Manufacturers', 

98  Am.  Dec.  298  (1868).  etc.,    Ins.    Co.,    8    Met.    (Mass.)    114 

38Rafferty  v.   New  Brunswick  F.  (1844). 

Ins.  Co.,  3  Harr.   (N.  J.  L.)  480,  38  "Knecht  v.  Mutual  L.  Ins.  Co.,  90 

Am.  Dec.  525   (1842).  Pa.  St.  118,  35  Am.  Rep.  641  (1871). 

39  Herrick  v.  Union  M.  F.  Ins.  Co.,  The  policy  contained  a  provision  to 
48  Me.  558,  77  Am.  Dec.  244  (1860).  the  effect  that  it  should  be  void  if 

40  Aurora  F.  Ins.  Co.  v.  Eddy,  55  any  of  the  statements  and  declara- 
111.  213  (1870).  tions  made  in  the  application,  upon 

"Hartford  Prot.  Ins.  Co.  v.  Har-  the  faith  of  which  the  policy  was 

mer,  2  Ohio  St.  452,  59  Am.  Dec.  684  issued,  should  be-  found  in  any  re- 

(1853).  spect   untrue.     But   see   contra,   on 

"Blumer  v.  Phoenix  Ins.  Co.,  45  the  same  policy,  Schultz  v.  Mutual 

Wis.  622   (1878).     See  McGannon  v.  L.  Ins.  Co.,  6  Fed.  672  (1881). 
Michigan,  etc.,  Ins.  Co.   (Mich.),  87 


97 


REPRESENTATIONS   AND    WARRANTIES. 


Ill 


An  ordinary  representation  is  not  a  part  of  the  contract  between  the 
insurer  and  the  insured,  and  if  a  statement  with  reference  to  a  future 
fact  is  to  have  force  it  should  be  inserted  in  the  policy,  or  in  the  ap- 
plication and  referred  to  in  the  policy,  in  such  a  manner  as  to  make 
it  a  part  thereof.  To  permit  an  oral  promissory  representation,  made 
before  the  contract  is  closed,  to  be  received  for  the  purpose  of  in- 
validating the  contract  after  it  has  gone  into  effect,  violates  well- 
established  rules  of  evidence.  Chancellor  Walworth,  after  an  ex- 
haustive review  of  the  authorities,  arrived  at  the  conclusion  that 
there  could  be  no  such  thing  as  a  promissory  warranty**  The  fed- 
eral court  held46  "that  an  actual  promise,  if  oral,  can  not  be  given  in 
evidence  to  defeat  a  policy  which  has  once  attached.  *  *  *  I 
have  seen  no  case  which  holds  that  an  oral  statement  of  a  fact  could 
be  construed  into  a  continuing  warranty  or  promise  when  the  contract 
is  in  writing."  Mr.  Justice  Gray,  in  a  leading  Massachusetts  case,47 
makes  a  clear  distinction  between  oral  and  written  promises,  and 
holds  that  the  latter  are  binding,  but  that  a  breach  of  an  oral  promise 
will  not  avoid  the  policy  unless  fraud  is  shown.  The  learned  judge 
says:  "The  word  representation  has  not  always  been  confined  in 


"  Alston  v.  Mechanics',  etc.,  Ins. 
Co.,  4  Hill  (N.  Y.)  329  (1842).  See 
note  to  Bowden  v.  Vaughan,  13  Eng. 
Rul.  Gas.  534  (1808). 

48  In  Albion  Lead  vv^orks  v.  Wil- 
liamsburg  City  F.  Ins.  Co.,  2  Fed. 
479  (1880),  the  court  said:  "It  is 
impossible  to  reconcile  the  decisions 
upon  this  question  of  a  continuing 
warranty.  When  an  underwriter 
asks  about  the  particulars  of  a  risk 
he  probably  takes  it  for  granted 
that  things  will  continue  as  they 
are,  but  when  the  courts  are  asked 
to  construe  this  impression  into  a 
covenant,  and  make  words  in  the 
present  tense  operate  as  a  stipula- 
tion for  the  future,  there  is  a  diffi- 
culty, and  the  authorities  are  doubt- 
ful and  divided.  The  result,  as  far 
as  I  can  gather  it,  is  that  when  the 
fact  appears  to  the  court  to  be  a 
very  important  one,  such  as  the  em- 

7 — ELLIOTT  INS. 


ployment  of  a  watchman,  a  majority 
of  them  have  said  that  this  ought 
to  be  considered  a  part  of  a  continu- 
ing agreement.  When  the  fact  does 
not  appear  to  be  so  important,  as 
that  a  dwelling-house  is  occupied, 
or  that  a  clerk  sleeps  in  the  store, 
it  is  not  of  that  character."  As 
said  by  May:  "It  is  obvious  that 
the  test  here  given  is  no  test  at  all, 
and  it  is  to  be  regretted  that  there 
has  been  any  departure  from  the 
salutary  rule  that  the  courts  will 
not  set  up  warranties  where  the  par- 
ties have  not  clearly  made  them. 
It  would  have  been  fortunate  if 
they  had  found  more  difficulty  con- 
verting impressions  or  expectations 
into  covenants." 

*TKimball  v.  ^Etna  Ins.  Co.,  9  Al- 
len (Mass.)  540,  85  Am.  Dec.  786 
(1865). 


§    112  MATTERS   VOIDING   CONTRACT.  98 

use  to  representations  of  facts  existing  at  the  time  of  making  the  pol- 
icy, but  has  been  sometimes  extended  to  statements  made  by  the  as- 
sured concerning  what  is  to  happen  during  the  term  of  the  insurance ; 
in  other  words,  not  to  the  present,  but  to  the  future ;  not  to  facts  which 
any  human  being  knows  or  can  know,  but  to  matters  of  expectation  or 
belief,  or  of  promise  or  contract.  Such  statements,  when  not  ex- 
pressed in  the  form  of  a  distinct  and  explicit  warranty  which  must 
be  strictly  complied  with,  are  sometimes  called  promissory  repre- 
sentations, to  distinguish  them  frpm  those  relating  to  facts  or  affirma- 
tive representations;  and  these  words  express  the  distinction:  the 
one  is  an  affirmation  of  a  fact  existing  when  the  contract  begins;  the 
other  is  a  promise  to  be  performed  after  the  contract  has  come  into 
existence.  Falsehood  in  the  affirmation  prevents  the  contract  from 
ever  having  any  life;  breach  of  the  promise  could  only  bring  it  to  a 
premature  end.  A  promissory  representation  may  be  inserted  in  the 
policy  itself;  or  it  may  be  in  the  form  of  a  written  application  for 
the  insurance,  referred  to  in  the  policy  in  such  a  manner  as  to  make 
it  in  law  a  part  thereof ;  and  in  either  case  the  whole  instrument  must 
be  construed  together.  But  this  written  instrument  is  the  expression 
and  the  only  evidence  of  the  duties,  obligations  and  promises  to  be  per- 
formed by  each  party  while  the  insurance  continues.  To  make  the 
continuance  or  termination  of  a  written  contract  which  has  once  taken 
effect  dependent  upon  the  performance  or  breach  of  an  oral  agree- 
ment would  be  to  violate  a  fundamental  rule  of  evidence.  A  rep- 
resentation that  a  fact  now  exists  may  be  either  oral  or  written,  for, 
if  it  does  not  exist,  there  is  nothing  to  which  the  contract  can  apply. 
But  an  oral  representation  as  to  a  future  fact,  honestly  made,  can 
have  no  effect ;  for,  if  it  is  a  mere  statement  of  an  expectation,  subse- 
quent disappointment  will  not  prove  that  it  was  untrue;  and  if  it  is 
a  mere  promise  that  a  certain  state  of  facts  shall  exist,  or  continue 
during  the  term  of  the  policy,  it  ought  to  be  embodied  in  the  written 
contract."48 

§  112.    Conclusion. — The  rule  deducible  from  the  authorities  is 
that  while  promissory  representations  are  recognized  and  enforced,49 

"As    to     promissory     representa-  120    (1844);    Prudential   Assur.   Co. 

tions,  see  further:     Prudential  As-  v.  ^tna  L.   Ins.  Co.,  52  Conn.  576 

sur.    Co.   v.    ^Etna    L.    Ins.    Co.,    23  (1885);      Wytheville     Ins.     Co.     v. 

Blatch.    (C.    C.)    223,    23    Fed.    438  Stultz,  87  Va.  629,  13  S.  E.  77  (1891). 

(1885);      Houghton      v.      Manufac-  4"  Straker  v.  Phenix  Ins.  Co.,  101 

turers',  etc.,  Ins.  Co.,  8  Met.  (Mass.)  Wis.  413,  77  N.  W.  752  (1898);  Phil- 


99 


REPRESENTATIONS    AND    WARRANTIES. 


113 


it  is  only  those  that  are  reduced  to  writing  and  made  a  part  of  the 
contract  in  the  nature  of  a  warranty  that  are  available.50  An  oral 
promissory  representation  made  in  good  faith,  without  an  intention 
to  mislead  or  deceive,  can  not  be  shown  for  the  purpose  of  destroying 
a  written  contract  which  has  already  attached.  But  when  such  prom- 
ises are  made  in  bad  faith,  with  the  intent  to  deceive  and  mislead 
the  insurer,  it  will  be  given  the  same  effect  as  an  affirmative  repre- 
sentation. The  fraud,  and  npt  the  agreement,  is  the  basis  of  the 
right  of  the  insurer. 

§  113.  Misrepresentation  by  agent. — An  agent  who  represents  his 
principal  in  a  certain  transaction  of  course  binds  the  principal  by 
his  statements  in  relation  thereto.  The  question  always  is  as  to  the 
character  of  the  agency.51 


lips  Ins.  (3d  ed.),  §  553;  Duer  Mar. 
Ins.  (ed.  1845)  647,  749;  Joyce  Ins., 
§  1917,  note. 

60  The  California  Code  (section 
2574)  provides  that  "a  representa- 
tion as  to  the  future  is  to  be  deemed 
a  promise,  unless  it  appears  that  it 
was  merely  a  statement  of  a  be- 
lief or  expectation,"  and  that  "a  rep- 
resentation can  not  be  allowed  to 
qualify  an  express  provision  of  a 
contract  of  insurance,  but  it  may 
qualify  an  implied  provision."  Mr. 
May  (Ins.,  §  1820)  says:  "Upon 
this  distinction  follows  the  impor- 
tant consequence  that  while  a  ma- 
terial falsity  of  an  affirmative  rep- 
resentation will  be  a  complete  de- 
fense to  an  action  on  a  policy  of  in- 
surance, the  material  falsity  of  an 
oral  promissory  representation 
without  fraud  is  no  defense  what- 
ever. And  the  reason  of  the  dis- 
tinction is  this:  the  falsehood  of 
the  representation  of  a  material  fact 
misleads  the  insured  into  a  contract 
which  he  does  not  intend  to  make. 
He  may  therefore  set  up  the  fact 
that  he  was  misled  or  deceived  as 
proof  that  no  agreement  was  ever 
made  since  there  was  no  concur- 


rence of  consent  upon  the  same 
facts.  But  an  oral  promissory  rep- 
resentation being  an  agreement 
prior  in  date  to  the  actual  contract 
of  insurance,  and  in  its  nature  such 
that  it  can  not  be  performed  until 
after  the  contract  of  insurance  had 
taken  effect,  can  not  be  set  up  to 
defeat  the  latter  contract;  for  this 
would  be  to  violate  a  fundamental 
rule  of  evidence,  and  to  make  the 
continuance  or  maintenance  of  a 
written  contract  dependent  upon  the 
performance  or  breach  of  an  earlier 
oral  agreement.  If  the  oral  agree- 
ment be  made  mala  fide,  and  with 
the  intention  to  mislead  and  de- 
ceive, the  fraud  will  have  the  same 
effect  as  the  material  falsity  of  an 
affirmative  representation.  But  if 
made  bona  fide,  and  without  the  in- 
tention to  deceive,  it  can  not  be  set 
up  to  avoid  the  contract.  Only 
those  promissory  representations 
are  available  for  such  a  purpose 
which  are  reduced  to  writing  and 
made  a  part  of  the  contract,  thus 
becoming,  substantially,  if  not 
formally,  warranties." 

31  See  §  92,  supra;  Brown  v.  Met- 
ropolitan L.  Ins.  Co.,  65  Mich  306,  8 


§    114  MATTERS   VOIDING    CONTRACT.  100 

§  114.  Effect  of  misrepresentation. — A  representation,  if  false  and 
material,  avoids  the  policy.  It  is  immaterial  whether  it  was  fraudu- 
lently or  innocently  made.52  It  will  be  observed  that  a  representa- 
tion, to  avoid  the  contract,  must  be  both  false  and  material.53  If  the 
fact  is  actually  material  and  untrue,  it  is  not  necessary  to  show  that 
the  representation  was  fraudulent,54  but  where  actual  fraud  exists — 
that  is,  where  it  clearly  appears  that  the  insurer  was  induced  to  issue 
the  policy  by  the  intentionally  false  statements  of  the  insured — the 
materiality  is  conclusively  presumed  and  need  not  be  proven.55  Thus, 
where  the  applicant  fraudulently  represented  that  he  was  the  moneyed 
man  of  the  firm,  and  thereby  induced  the  insurer  to  take  the  risk, 
the  policy  was  avoided,  although  the  fact  was  immaterial  to  the  risk.56 
But  there  are  cases  that  hold  that  undesigned  and  unintentional  mis- 
statements  will  not  avoid  the  policy  unless  made  under  circumstances 
of  gross  negligence.57 

§  115.  Substantial  truth  required. — Where  a  representation  is 
made  with  reference  to  a  material  fact  it  must  be  substantially  true 
or  it  will  avoid  the  contract.  In  this  respect  representations  are  con- 
strued less  strictly  than  warranties.58 

§  116.  Test  of  materiality. — The  materiality  of  a  representation 
is  determined  by  the  same  rules  which  we  found  applicable  in  the 
case  of  concealment.59  If  the  representation  is  of  such  a  nature  as 
would  probably  induce  the  insurer,  being  governed  by  the  rules  which 

Am.  St.  356  (1887);  Grattan  v.  Met-  "  Pawson  v.  Watson,  2  Cowp.  785, 

ropolitan  L.  Ins.  Co.,  80  N.  Y.  293,  36  13  Eng.  Rul.  Cas.  540  (1778). 

Am.  St.  617  (1880).  ""Valton  v.  National,  etc.,  Assur. 

82  Armour  v.  Transatlantic  F.  Ins.  Co.,  20  N.  Y.  32  (1859). 

Co.,  90  N.  Y.  450  (1882);  Provident  OT  See   Penn    Mut.    L.    Ins.   Co.    v. 

Sav.,  etc.,  Soc.  v.  Llewellyn,  58  Fed.  Mechanics',   etc.,   Co.,   72   Fed.   413, 

940,  7  C.  C.  A.  579  (1893).  19   C.   C.  A.   286    (1896);    Columbia 

"Clason  v.  Smith,  3  Wash.(C.  C.)  Ins.   Co.  v.  Cooper,  50  Pa.   St.   331 

156      (1812);      Vivar     v.     Supreme  (1865). 

Lodge,  52  N.  J.  L.   455,  20  Atl.   36  "Phoenix   L.   Ins.   Co.   v.   Raddin, 

(1890).  120  U.  S.  183  (1887);  Missouri,  etc., 

M  Lewis  v.  Eagle  Ins.  Co.,  10  Gray  Trust  Co.  v.  German  Nat.  Bank,  77 

(Mass.)    508    (1858).     See  Wood  v.  Fed.  117,  40  U.  S.  App.  710  (1896). 

Firemen's  F.  Ins.  Co.,  126  Mass.  316  M  §  90,  supra.     See  Civil  Code  Cal., 

(1879).  §  2581. 


101  REPRESENTATIONS    AND   WARRANTIES.  §    117 

ordinarily  control  intelligent,  prudent  underwriters,  to  take  the  risk, 
or  to  accept  it  at  a  lower  premium  than  he  otherwise  would,  it  is  ma- 
terial. The  test  is  the  probable  effect  which  the  statement  might 
naturally  and  reasonably  be  expected  to  produce  on  the  mind  of  the 
insurer,60  and  not  the  fact  that  it  actually  increased  the  risk.61  But 
the  parties  may  by  express  stipulation  preclude  inquiry  into  the  ques- 
tion of  materiality,62  as  where  a  representation  is  made  in  the  form 
of  an  answer  to  a  specific  question.  The  parties  may  thus,  unless  re- 
strained by  statute,  make  material  a  fact  which  would  otherwise  be 
immaterial.63  The  question  of  materiality,  when  not  thus  deter- 
mined, is  for  the  jury.64 

§  117.  Materiality — Opinion  of  experts. — The  cases  which  deal 
with  the  question  of  the  right  of  an  expert  to  testify  as  to  whether  a 
certain  fact  is  material  or  not  are  in  a  bewildering  state  of  confusion. 
Judge  Taft,  after  an  elaborate  review  of  the  authorities,  recently 
held  that  the  question  of  materiality  is  always  for  the  jury,  unless  the 
answers  in  the  application  are  expressly  made  the  basis  of  the  con- 
tract; and  even  then,  where  the  statute  provides  that  innocent  mis- 
representations in  matters  not  material  to  the  risk  shall  constitute  no 
defense ;  that  by  the  weight  of  authority  in  this  country  an  insurance 
expert  can  not  be  asked  his  opinion  whether  an  undisclosed  or  mis- 

80  Columbia  Ins.  Co.  v.  Lawrence,  63§   84,  supra;  Phoenix  Life  Ins. 

10  Pet.  (U.  S.)  507  (1836);  Ferine  v.  Co.  v.  Raddin,  120  U.  S.  183  (1887); 

Grand  Lodge,  51  Minn.  224  (1892);  Miller  v.  Mut.  Ben.  L.  Ins.  Co.,  31 

Waterbury  v.  Dakota  F.  &  M.  Ins.  Iowa  216    (1871).    Under  such  cir- 

Co.,  6  Dak.  468,  43  N.  W.  697  (1889).  cumstances   the    court    must    rule 

If  the  circumstances  show  that  the  whether  the  matter  is  material,  and 

insurer  did  not  rely  upon  the  mis-  the  jury  then  determines  its  truth, 

representation,  and  that  it  did  not  Of  course,  the  answer  may  be  so 

induce  him  to  make  the  contract,  it  irresponsive  as  to  leave  the  ques- 

1s  immaterial:     Flinn  v.  Headlam,  tion   unanswered.    In   the   absence 

9  Barn.  &  C.  693  (1829).  of  fraud,  such  an  answer  is  imma- 

MValton  v.  National,  etc.,  Assur.  terial:     Ferine  v.  Grand  Lodge,  51 

Co.,  20  N.  Y.  32  (1859).  Minn.  224   (1892). 

82  Stensgaard  v.  St.  Paul,  etc.,  Ins.  M  §  90,  supra;  Caplis  v.  American 

Co.,  50  Minn.  429   (1892);   Cerys  v.  F.  Ins.  Co.,  60  Minn.  376,  62  N.  W. 

State  Ins.  Co.,  71  Minn.  338  (1898).  440     (1895);     Manufacturers',    etc., 

See    language    of   Lord    Chancellor  Ins.  Co.  v.  Zeitinger,  168  111.  286,  61 

Cranworth  in  Anderson  v.  Fitzger-  Am.  St.  105  (1897). 
aid,  4  H.  of  L.  Gas.  513   (1853). 


§    118  MATTERS   VOIDING   CONTRACT.  102 

represented  fact  is  or  is  not  material  to  the  risk ;  but  he  may  be  asked 
concerning  the  usages  of  insurance  companies  generally  in  respect  to 
rejecting  risks  or  charging  a  higher  rate  of  premium  when  made 
aware  of  the  fact  in  question.65 

§  118.  Burden  of  proof. — The  burden  of  proof  to  establish  the 
materiality  of  the  concealment  or  misrepresentation,  as  well  as  the 
fraudulent  intent,  where  that  is  necessary,  is  upon  the  defendant.86- 
This  burden  is  not  shifted  where  it  is  admitted  that  the  insured  made 
an  untrue  •  answer  concerning  other  insurance,  for  if  there  is  a  pre- 
sumption that  his  failure  to  mention  it  is  intentional,  there  is  also  a 
presumption  that  a  person  does  not  make  a  fraudulent  misstatement, 
and  the  question  is  for  the  jury  upon  all  the  evidence.67  But  the 
rule  is  generally  held  to  be  otherwise  in  case  of  a  warranty,  which  is 
in  the  nature  of  a  condition  precedent.  The  plaintiff  must  aver  and 
prove  the  strict  performance  of  such  conditions.68  But  this  rule  is 
said  not  to  be  applicable  to  "representations  amounting  to  warranties 
which  are  contained  in  the  application  only."  A  defendant  who  re- 
lies upon  such  a  warranty  must  allege  it  and  assume  the  burden  of 
proof.  In  one  case  Judge  Wallace  said:69  "The  rule  requiring  the 
performance  of  warranties  to  be  averred  and  proved  was  engrafted 
into  the  law  of  insurance  before  it  was  customary  for  underwriters 
to  inquire  of  the  insured  the  full  and  detailed  applications  which  are 
a  feature  of  so  much  prominence  in  the  modern  contract,  especially 
in  the  contract  of  life  insurance.  The  policy  is  the  evidence  deliv- 
ered to  the  insured  of  the  contract  of  the  insurer,  and,  ordinarily,  of 

""Penn  Mut.  L.  Ins.  Co.  v.  Me-  Wood,  73  Fed.  81,  19  C.  C.  A.  264 

chanics',  etc.,  Co.,  72  Fed.  413,  19  (1896);  McLoon  v.  Commercial  Ins. 

C.  C.  A.  286,  38  L.  R.  A.  233  (1896).  Co.,  100  Mass.  472  (1868).  As  to 

*  Penn  Mut.  L.  Ins.  Co.  v.  Me-  manner  of  pleading  performance, 

chanics',  etc.,  Co.,  72  Fed.  413,  19  C.  see  Hart  v.  National  Masonic,  etc., 

C.  A.  286  (1896);  Piedmont,  etc.,  Ins.  Ass'n,  105  Iowa  717,  75  N.  W.  508 

Co.  v.  Ewing,  92  U.  S.  377  (1875);  (1898).  A  waiver  or  estoppel  can 

Grangers'  L.  Ins.  Co.  v.  Brown,  57  not  be  shown  unless  pleaded:  Mc- 

Miss.  308  (1879);  Jones  v.  Brooklyn  Coy  v.  Iowa  State  Ins.  Co.,  107  Iowa 

L.  Ins.  Co.,  61  N.  Y.  79  (1874).  80,  77  N.  W.  529  (1898). 

"Penn  Mut.  L.  Ins.  Co.  v.  Me-  «• American  Credit,  etc.,  Co.  v. 

chanics',  etc.,  Co.,  72  Fed.  413,  19  Wood,  73  Fed.  81,  19  C.  C.  A.  264 

C.  C.  A.  286  (1896).  (1896). 

•*  American    Credit,    etc.,     Co.     v. 


103  REPRESENTATIONS    AND    WARRANTIES.  §    1 18 

itself  constitutes  complete  evidence  of  the  contract,  while  the  appli- 
cation, although  it  may  modify  the  contract,  is  in  the  nature  of  de- 
fensive evidence  entrusted  to  the  insurer  for  his  protection.  As  a 
matter  of  pleading,  if  the  policy  is  set  forth,  and  compliance  with  all 
conditions  precedent  recited  in  it  is  averred,  there  is  no  necessity  for 
referring  to  the  application,  and  the  complaint  or  declaration  is  suffi- 
cient upon  its  face.  Nothing  is  required  to  be  proved  which  does  not 
support  some  necessary  allegation  in  the  complaint,  and  there  seems 
to  be  no  good  reason  which  requires  the  plaintiff  to  assume  the  bur- 
den of  proving  affirmatively  the  truth  of  the  statements  in  an  applica- 
tion not  challenged  by  the  defendant."  In  Minnesota  it  is  held  that  a 
warranty  is  not  a  condition  precedent,  and  that  the  burden  of  alleging 
and  proving  its  falsity  is  upon  the  insurer.70  Mr.  Justice  Mitchell 
said:  "A  condition  precedent  is  known  in  the  law  of  insurance  as 
one  which  is  to  be  performed  before  the  agreement  of  the  parties  be- 
comes operative;  a  condition  subsequent  calls  for  the  performance  of 
some  act  or  happening  of  some  fact  after  the  contract  is  entered  into, 
and  upon  the  performance  or  happening  of  which  its  obligation  is 
made  to  depend.  In  case  of  a  mere  warranty,  the  contract  takes 
effect  and  becomes  operative  immediately.  It  is  true  that,  where  a 
policy  of  insurance  so  provides,  if  there  is  a  breach  of  a  warranty,  the 
policy  is  void  ab  mitio.  But  this  does  not  change  a  warranty  into  a 
condition  precedent,  as  understood  in  the  law.  It  lacks  the  essential 
element  of  a  condition  precedent,  in  that  it  contains  no  stipulation 
that  an  event  shall  happen  or  an  act  shall  be  performed  in  the  future, 
before  the  policy  shall  become  effectual.  It  is  more  in  the  nature  of  a 
defeasance,  where  the  insured  contracts  that,  if  the  representations 
made  by  him  are  not  true,  the  policy  shall  be  defeated  and  avoided. 
But,  even  if  these  warranties  are  to  be  deemed  conditions  precedent,  it 
has  become  settled  in  insurance  law,  for  practical  reasons,  that  the 
burden  is  on  the  insurer  to  plead  and  prove  the  breach  of  the  war- 
ranties. Not  only  so,  but  he  must,  in  his  pleading,  single  out  the 
answers  whose  truth  he  proposes  to  contest,  and  show  the  facts  on 
which  his  contention  is  founded.  Otherwise,  the  insured  would  enter 
the  trial  ignorant  as  to  which  of  his  numerous  answers  would  be  as- 

70  Chambers  v.  Northwestern,  etc.,  etc.,  Ins.  Co.,  17  Minn.  479,  Gil.  473 

Ins.  Co.,  64  Minn.  495,  67  N.  W.  367  (1871);    Malicki    v.    Chicago,     etc., 

(1896);  Hale  v.  Life  Indemnity,  etc.,  Life  Soc.,  119  Mich.  151,  77  N.  W. 

Co.,    65    Minn.   548,    68   N.   W.    182  690     (1899);    Coburn    v.   Travelers' 

(1896),  overruling  Price  v.  Phoenix,  Ins.  Co.,  145  Mass.  226,  13  N.  B.  604. 


§    119  MATTERS   VOIDING    CONTRACT.  104 

sailed  as  false.  The  number  of  questions  in  these  applications  is 
usually  very  great,  relating  to  the  habits  and  health  of  ancestors,  the 
personal  habits  and  condition  of  the  applicant,  etc.,  the  truth  of  many 
of  which  it  would  be  impossible  to  prove  affirmatively  after  the  death 
of  the  insured.  To  require  such  proof  on  the  part  of  the  beneficiary 
would  defeat  more  than  half  of  the  life  policies  ever  issued.  On  the 
other  hand,  it  is  no  harship  to  require  of  the  insurer,  if  he  believes 
that  any  of  these  answers  were  false,  that  he  specifically  allege  which 
ones  he  claims  to  be  false,  and  produce  evidence  of  the  truth  of  his 
claim.  *  *  *  We  therefore  hold  that  it  was  no  part  of  the  plaint- 
iff's case  to  either  allege  or  prove  the  truth  of  the  answers  in  the 
application,  that  the  burden  of  alleging  and  proving  their  falsity  was 
on  the  defendant,  that  it  was  bound  to  specify  in  its  defense  the  par- 
ticular answers  which  -it  claimed  were  false,  and  that  on  the  trial  it 
was  properly  limited  in  its  proof  to  those  answers  which  it  had 
specifically  alleged  to  be  false."  A  condition  subsequent  in  the  policy, 
as  an  agreement  to  use  diligence  and  care  for  the  preservation  of  the 
property,  need  not  be  pleaded,  as  it  is  matter  of  defense.71 

§  119.  Statutory  provisions. — The  manifest  unfairness  and  injus- 
tice which  result  from  making  statements,  whether  material  or 
not,  strict  warranties,  has  resulted  in  the  enactment  of  statutes  in  a 
number  of  states  which  restrict  the  liberty  of  contract  in  this  respect 
and  provide  a  rule  of  construction  for  such  provisions  in  insurance 
contracts.  These  statutes  are  remedial  and  are  sustained  as  proper 
regulations  of  the  business  of  insurance.  The  Ohio  statute  was  re- 
cently before  the  supreme  court  of  the  United  States,  and  the  court 
said  :72  "It  was  for  the  legislature  of  Ohio  to  define  the  public  pol- 
icy of  that  state  in  respect  of  life  insurance,  and  to  impose  such  con- 
ditions on  the  transaction  of  business  by  life  insurance  companies 
within  the  state  as  was  deemed  best.  We  do  not  perceive  any  ar- 
bitrary classifications  or  unlawful  discrimination  in  the  legislation, 
but,  at  all  events,  we  can  not  say  that  the  federal  constitution  has  been 
violated  in  the  exercise  in  this  regard  by  the  state  of  its  undoubted 
power  over  corporations." 

"Johnston  v.  Northwestern,  etc.,  "John  Hancock,  etc.,  Ins.  Co.  v. 
Ins.  Co.,  94  Wis.  117,  68  N.  W.  868  Warren,  181  U.  S.  73  (1901),  re- 
(1896).  ferring  to  §  3625,  Ohio  Rev.  Stat. 


105  REPRESENTATIONS   AND   WARRANTIES.  §    120 

§  120.  The  Massachusetts  statute. — The  Massachusetts  statute 
contains  the  following  provisions:  "No  oral  or  written  misrepre- 
sentation made  in  the  negotiation  of  a  contract  or  policy  of  insur- 
ance by  the  assured  or  in  his  behalf  shall  be  deemed  material  or  de- 
feat or  avoid  the  policy,  or  prevent  its  attaching,  unless  such  mis- 
representation is  made  with  actual  intent  to  deceive,  or  unless  the 
matter  misrepresented  or  made  a  warranty  increased  the  risk  of 
loss."73  This  act  applies  to  all  contracts  of  insurance  and  affects 
strict  warranties  as  well  as  representations.  In  a  case  decided  before 
the  words  "or  made  a  warranty"  in  the  last  line  were  inserted,  the 
court  said:7*  "As  to  mere  representations,  the  statute  may  well  be 
held  to  be  only  declaratory,  but  as  to  warranties  it  made  a  new  rule. 
In  the  opinion  of  the  majority  of  the  court,  it  speaks  in  terms  neither 
of  warranties  nor  of  representations,  technically  so  called,  but  deals 
with  all  representations  made  in  negotiating  the  contract  or  policy. 
Misstatements  of  fact,  whether  the  statement  is  said  to  be  by  the  par- 
ties either  a  warranty  or  a  representation,  are  equally  representations, 
and  are  placed  in  each  case  upon  the  same  footing  by  the  statute 
which  applies  to  them  if  the  statements  are  called  warranties  by  the 
parties,  no  less  than  if  they  are  mere  representations." 

§  121.  The  Pennsylvania  statute. — In  this  state  it  is  provided  that 
"whenever  the  application  for  a  policy  of  insurance  contains  a  war- 
ranty of  the  truth  of  the  answers  therein  contained,  no  misrepre- 
sentation or  untrue  statement  in  such  application,  made  in  good  faith 
by  the  applicant,  shall  effect  a  forfeiture  or  be  a  ground  of  defense  in 
any  suit  brought  upon  any  policy  issued  upon  the  faith  of  such  appli- 
cation, unless  such  misrepresentation  or  untrue  statement  relates  to 
some  matter  material  to  the  risk/'75  This  legislation  was  intended 
to  strike  down  literal  warranties  so  far  as  they  might  be  resorted  to 
for  the  purpose  of  enforcing  a  forfeiture  based  on  matters  actually 
immaterial.  It  provides  a  rule  of  construction  for  the  purpose  of 

78  P.  S.  119,  §  181  (1895),  ch.  271.  (1895).     See  further,  Ring  v.  Phoenix 

The  Minnesota  statute   (Laws  1895,  Assur.  Co.,  145  Mass.  426,  14  N.  E. 

•ch.  175,  §  20)  is  a  copy  of  the  Massa-  525;  Durkee  v.  India  Mut.  Ins.  Co., 

chusetts  act,  omitting  the  words  "or  159  Mass.  514,  34  N.  E.  1133;  Levie 

made  a  warranty,"  which  were  add-  v.    Metropolitan    L.    Ins.    Co.,    163 

ed  in  Massachusetts  in  1895.  Mass.  117,  39  N.  E.  792. 

T*  White    v.    Provident    Sav.,    etc.  7B  Pa.  Laws  1885,  p.  134,  §  1. 
Soc.,    163    Mass.    108,    39   N.   E.    771 


§    122  MATTERS   VOIDING   CONTRACT.  106 

preventing  injustice,  and  "it  is  as  much  the  duty  of  courts  to  enforce 
such  rules  as  it  is  to  administer  the  statute  of  frauds  and  perjuries."76 
The  effect  is  to  leave  open  to  judicial  investigation  in  the  ordinary 
way  the  question  whether  any  fact  concerning  which  inquiry  was 
made,  and  an  untrue  answer  given,  was  material  to  the  risk.  If  found 
to  be  material,  the  policy  will  be  avoided,  whether  the  untrue  answer 
was  made  in  good  faith  or  not.  If  not  material,  the  breach  of  war- 
ranty will  work  no  prejudice  to  the  insured  if  the  answer  was  given 
in  good  faith,  but  if  in  bad  faith,  and  for  the  purpose  of  misleading 
the  company,  the  policy  will  be  avoided,  notwithstanding  the  imma- 
teriality of  the  fact.  Bad  faith  in  this  connection  means  with  an 
actual  intent  to  mislead  or  deceive,  and  does  not  include  a  misstate- 
ment  honestly  made  through  inadvertence,  or  even  gross  forgetful- 
ness  or  carelessness.77 

§  122.  Similar  provisions  in  other  states. — Similar  statutes  are 
found  in  other  states.  Thus,  in  Michigan,  a  breach  of  a  condition  in 
a  fire  policy  will  not  render  it  void  if  the  company  has  not  been  in- 
jured by  such  breach  or  a  loss  has  not  occurred  during  such  breach 
or  by  reason  thereof.  The  standard  form  of  policy  is  required  to 
contain  a  provision  that  "provided  a  loss  shall  occur  on  the  property 
insured  while  such  breach  of  condition  continues  or  such  breach  of 
condition  is  the  primary  or  continuing  cause  of  the  loss."78  In  Mary- 
land, where  the  application  for  a  policy  of  life  insurance  contains  a 
warranty  of  the  truth  of  the  answers,  "no  representation  or  untrue 
statement  in  such  application  made  in  good  faith  by  the  applicant 
shall  effect  a  forfeiture  or  be  a  ground  of  defense  in  any  suit  brought 
upon  any  policy  of  insurance  issued  upon  the  faith  of  such  applica- 
tion, unless  such  misrepresentation  or  untrue  statement  relates  to  some 
matter  material  to  the  risk."  In  Kentucky  "all  statements  or  descrip- 
tions in  any  application  for  a  policy  of  insurance  shall  be  deemed  and 
held  representations  and  not  warranties;  nor  shall  any  misrepresenta- 
tions, unless  material  or  fraudulent,  prevent  a  recovery  on  the  pol- 

74  Hermany  v.  Fidelity,  etc.,  Ass'n,  78  Mich.  Laws  1897,  p.  214,  act  167, 

151  Pa.  St.  17,  24  Atl.  1064.  Comp.  Laws  1897,  §  5180,  applies  to 

77  Perm  Mut.  L.  Ins.  Co.  v.  Median-  all  policies  issued  after  its  passage, 

ics',  etc.,  Co.,  72  Fed.  413,  19  C.  C.  A.  whether  Michigan  standard  policies 

286  (1896);  Penn  Mut.  L.  Ins.  Co.  v.  or  not:  McGannon  v.  Michigan, 

Mechanics',  etc.,  Co.,  73  Fed.  653,  19  etc.,  F.  Ins.  Co.  (Mich.),  87  N.  W.  62, 

C.  C.  A.  316.  54  L.  R.  A.  739  (1901). 


107  REPRESENTATIONS   AND    WARRANTIES.  §    123 

icy."79  In  Maine  "all  statements  of  descriptions  or  value  in  an  ap- 
plication or  policy  of  insurance  are  representations  and  not  warran- 
ties; erroneous  descriptions  or  statements  of  value  or  title  by  the 
insured  do  not  prevent  his  recovering  on  his  policy  unless  the  jury 
find  that  the  difference  between  the  property  as  described  and  as  it 
really  exists  contributed  to  the  loss  or  materially  increased  the  risk; 
a  change  in  the  property  insured  or  in  its  use  or  occupation,  or  a 
breach  of  any  of  the  terms  of  the  policy  by  the  insured,  do  not  affect 
the  policy  unless  they  increase  the  risk;  nor  shall  any  misrepresenta- 
tion of  the  title  or  interest  of  the  insured,  in  the  whole  or  any  part  of 
the  property  insured,  real  or  personal,  unless  material  or  fraudulent, 
prevent  his  recovering  on  his  policy  to  the  extent  of  his  insurable  in- 
terest."80 In  Iowa,  subject  to  certain  exceptions,  "any  condition  or 
stipulation  in  any  application,  policy  or  contract  of  insurance  making 
the  policy  void  before  the  loss  occurs  shall  not  prevent  recovery  there- 
on by  the  insured,  if  it  shall  be  shown  by  the  plaintiff  that  the  failure 
to  observe  such  provision,  or  the  violation  thereof,  did  not  contribute 
to  the  loss."81  Similar  provisions  are  found  in  Virginia,82  Ohio,83 
New  Hampshire,84  Missouri,85  Georgia,86  and  possibly  in  other  states. 
Such  statutes  enter  into  and  form  a  part  of  every  contract  of  insur- 
ance made  while  they  are  in  force.87 

§  123.  Controlling  force  of  such  statutes. — Where  such  statutes 
are  in  force  the  parties  can  not  contract  as  to  what  statements  are 
material,  as  the  question  is  to  be  judicially  determined  in  each  case 
by  the  court,  if  the  materiality  is  obvious,  or  by  the  jury,  if  it  depends 
upon  disputed  facts.88  In  Kentucky  it  was  at  first  held  that  the  par- 

79  Maryland  Laws  1894,  ch.  662;  B.         82Va.  Laws  1900,  ch.  515,  p.  550. 
&  C.  Ky.  Stat,  ch.  32,   §   639.     See         83  Ohio  Rev.  St.  1890,  §  3625. 
Germania  Ins.  Co.  v.  Rudwjg,  80  Ky.        "  New  Hampshire  Laws  1885,  ch. 
223     (1882),     overruling     Farmers'  73. 

etc.,  Ins.  Co.  v.  Curry,  13  Bush  (Ky.)  »  Mo.  Rev.  St.  1889,  §  5849. 

312   (1877);   Imperial  F.  Ins.  Co.  v.  *  Georgia  Code  1882,  §§  2803,  2804. 

Kiernan,  83  Ky.  468  (1885);  Kenton  See  Southern  L.  Ins.  Co.  v.  Wilkin- 

Ins.   Co.  v.   Wigginton,   89  Ky.   330  son,  53  Ga.  535  (1873);  Mobile,  etc., 

(1889).  Ins.    Co.    v.    Coleman,    58    Ga.    251 

80  Rev.  St.  Me.,  ch.  49,  §  20.    See  (1876). 

also    provision    in    Maine    standard  w  Klostermann  v.  Germania  L.  Ins. 

form   of   policy,   construed   in   Lin-  Co.,  6  Mo.  App.  582  (1879). 

scott  v.  Orient  Ins.  Co.,  88  Me.  497  M  Fidelity  Mut.  L.  Ass'n  v.  Miller, 

(1895);  Bigelow  v.  Granite,  etc.,  Ins.  92  Fed.  63,  34  C.  C.  A.  211  (1899); 

Co.,  94  Me.  39  (1900).  Hermany  v.  Fidelity,  etc.,  Ass'n,  151 
"  McClain's  Iowa  Code,  §  1743. 


123 


MATTERS   VOIDING    CONTRACT. 


108 


ties  could  waive  the  benefits  of  the  statute  and  by  express  contract  de- 
termine the  question  of  materiality,89  but  this  was  so  manifestly  con- 
trary to  the  object  of  the  law  that  the  decision  was  reversed,  and  it 
is  now  held  that  only  such  statements  as  are  material  or  fraudulent 
will  avoid  the  policy.80 

Pa.  St.  17  (1888);  Lutz  v.  Metropol-  "Germania  Ins.  Co.  v.  Rudwig,  80 

itan  L.  Ins.  Co.,  186  Pa.  St.  527,  40  Ky.   223    (1882).    For   construction 

Atl.  1104  (1898).  of  such  statutes,  see  also  National 

"Farmers',  etc.,  Ins.  Co.  v.  Curry,  Bank  v.  Union  Ins.  Co.,  88  Cal.  497, 

13  Bush  (Ky.)  312,  26  Am.  Rep.  194  26   Pac.   509    (1891);    Fidelity,   etc., 

(1877).  Ass'n  v.  Ficklin,  74  Md.  172  (1891). 


PART  IV. 

OF  THE  CONSIDERATION. 


CHAPTER  VII. 


THE    PREMIUM. 


SEC. 

125.  In  general. 

I.  The  Premium  in  Ordinary  In- 
surance. 

126.  Nature  of  premium. 

127.  Obligation  to  pay  premium. 

128.  Payment — Condition   precedent 

— Forfeiture. 

129.  Manner,  time  and  place  of  pay- 

ment. 

130.  The    giving    of    a    promissory 

note. 

131.  Payment  after  loss  or  death. 

132.  Paid-up  policies. 

133.  Premium  notes. 

134.  Notice  of  time  when  premium 

is  due. 


SEC. 

135.  Right    to     recover     premiums 

paid. 

II.  Assessments  in  Mutual  Com- 
panies and  Benevolent  So- 
cieties. 

136.  Dues  and  assessments. 

137.  Liability  to  assessment. 

138.  Effect  of  non-payment  of  assess- 

ment. 

139.  Withdrawal  of  member. 

140.  Insolvency  of  company. 

141.  Death  during  period  of  suspen- 

sion. 

142.  Reinstatement. 

143.  Waiver — Estoppel. 


§  125.  In  general. — The  insurance  company,  for  an  agreed  con- 
sideration, and  upon  condition  that  certain  facts  exist,  binds  itself 
upon  a  certain  contingency  to  pay  to  the  insured  a  fixed  sum,  or  a 
sum  to  be  determined  by  the  amount  of  the  loss.  The  amount  to  be 
paid  by  the  insured,  as  a  consideration  therefor,  is  called  the  pre- 
mium in  ordinary  insurance,  and  dues  or  assessments  in  mutual  in- 
surance and  benevolent  societies.  It  is  payable  according  to  stipula- 
tion which  determines  the  amount  and  time  of  such  payment.  In  the 
case  of  fire  insurance,  the  premium  is  a  stipulated  sum  for  an  insur- 
ance for  a  certain  specified  period,  at  the  end  of  which  the  contract 

(109) 


§    126  THE    CONSIDERATION.  110 

terminates.  Life  insurance  contracts  may  be  for  fixed  periods,  as  for 
one  year,  or  for  life,  with  a  provision  for  payment  of  premiums  at 
stated  annual  or  semi-annual  intervals,  under  conditions  which  pro- 
vide for  forfeiture  or  termination  of  the  contract  if  such  premiums  are 
not  paid  in  advance  upon  a  stipulated  date.1  Life  insurance  policies 
are  also  issued  for  a  certain  number  of  years,  with  a  provision  for 
termination  at  that  time  by  payment  to  the  insured  of  a  certain 
amount  in  cash  or  the  issuance  to  him  of  a  paid-up  policy.  The  con- 
sideration in  what  is  known  as  mutual  insurance  and  mutual  benefit 
associations  is  payable  at  short  intervals,  and  is  known  as  assess- 
ments and  dues.  These  amounts  may  be  definitely  fixed,  or  they 
may  be  left  to  be  determined  by  the  necessities  of  the  case  and  sub- 
ject to  increase  as  the  insured  increases  in  age. 

/.     The  Premium  in  Ordinary  Insurance. 

§  126.  Nature  of  premium. — The  agreed  consideration  for  assum- 
ing and  carrying  the  risk  is  called  the  premium.2  It  is  a  stipulated 
sum  in  consideration  of  which  the  underwriter  agrees  to  take  upon 
himself  the  risk  of  loss  and  to  indemnify  the  assured  against  it.8 
The  amount  or  rate  is  generally  agreed  upon  and  inserted  in  the  pol- 
icy, but  it  may  be  determined  by  custom  and  usage.4  The  contract 
may  provide  for  an  increase  or  reduction  in  the  rate  of  premium  as 
certain  risks  are  added  to  or  eliminated  from  the  contract.  The  pay- 
ment of  the  premium  and  the  assumption  of  the  risk  are  correlative; 
hence  if  the  premium  is  not  paid  the  insurance  does  not  attach;  if 
the  risk  does  not  attach  the  premium  paid  may  be  recovered.3  A 
clause  in  the  policy  of  an  assessment  company  providing  that  the 
rate  of  assessment  may  be  changed  each  five  years  to  correspond  with 
the  actual  mortality  experience  of  the  company  authorizes  it  to  change 
the  rates  at  different  ages  as  required  by  the  results  of  its  experience.6 

1  See  §  358,  infra.    As  to  the  dis-  in  tontine  insurance,  see  Uhlman  v. 

tinction  between  a  policy  for  a  short  New  York  L.  Ins.  Co.,  109  N.  Y.  421 

term  and  one  for  life,  see  McDougall  (1888);  Thompson  v.  Thorne,  83  Mo. 

v.  Provident,  etc.,  Soc.,  135  N.  Y.  551,  App.  241  (1899). 

32   N.  B.   251    (1892);    McMaster  v.  4  Pollock  v.  Donaldson,  3  Dall.  (U. 

New   York   L.   Ins.   Co.    (U.    S.),   22  S.)  510  (1799). 

Sup.  Ct.  10  (1901).  '-  Waller   v.    Northern   Assur.   Co., 

'Emerigon  Ins.    (Meredith's  ed.),  64    Iowa    101     (1884).     See    §    135, 

oh.  3,  §  1.  infra. 

*  As  to  the  nature  of  the  premium  °  Mutual    Res.    Fund    L.    Ass'n   v. 


Ill 


THE    PREMIUM. 


127 


In  many  states  there  are  statutes  which  forbid  discriminating  against 
colored  persons  in  the  rates  of  premiums,  and  which  require  uniform 
rates  for  all  persons  of  the  same  class  and  equal  expectancy  of  life.7 
These  statutes,  which  make  it  a  criminal  offense  for  an  agent  to  re- 
bate a  premium,  do  not  unduly  interfere  with  the  right  to  contract, 
and  are  constitutional.8 

§  127.  Obligation  to  pay  premium. — Whether  the  amount  of  the 
stipulated  premium  becomes  a  debt  due  from  the  insured  to  the  in- 
surer depends  entirely  upon  the  contract  and  the  circumstances. 


Taylor  (Va.),  37  S.  E.  854  (1901). 
An  insurance  policy  contained  a 
table  of  ages  from  25  to  60  years, 
showing  a  gradual  increase  in  the 
premium  from  the  first  age  named 
to  the  last.  It  also  contained  a  pro- 
vision that  the  company  agreed  to 
renew  insurance  during  each  suc- 
cessive year  of  the  life  of  the  in- 
sured, "from  date  hereof,"  on  pay- 
ment on  or  before  a  certain  date  in 
each  successive  year  of  the  annual 
premium  rate  for  the  age  attained, 
in  accordance  with  the  table  men- 
tioned. No  figures  were  given  be- 
yond the  age  of  sixty,  but  the  pre- 
miums thereafter,  it  was  held,  were 
to  be  determined  by  calculation  on 
the  rule  of  progression  shown  by  the 
table,  and  do  not  continue  the  same 
as  that  provided  for  the  age  of 
sixty:  Nail  v.  Provident  Sav.  L.  As- 
sur.  Soc.  (Tenn.  Ch.),  54  S.  W.  109. 

7  See  note  to  Joyce  Ins.,  §  1091, 
where  the  statutes  are  collected. 
In  Key  v.  National  L.  Ins.  Co.,  107 
Iowa  446,  78  N.  W.  68  (1899),  it  was 
held  that  the  statute  would  not  pre- 
vent a  person  who  consented  to  take 
out  a  policy  of  insurance  on  the 
representation  that  the  company 
could  make  her  a  loan,  from  recov- 
ering the  premium  after  the  loan 
was  refused.  The  court  said:  "It 
is  insisted  that  the  making  of  the 
loan  was  a  condition  subsequent  to 


the  acceptance  of  the  policy;  that 
the  contract  of  insurance  went  into 
force,  and  the  plaintiff's  liability  ac- 
crued thereon,  before  any  obligation 
was  incurred  to  make  the  loan; 
therefore,  that  the  plaintiff's  in- 
debtedness for  the  premium  was 
entirely  independent  of  any  right 
she  may  have  to  insist  on  her  other 
claim.  This  is  not  the  contract 
disclosed  by  the  testimony.  As  a 
matter  of  fact,  the  taking  out 
of  the  insurance  was  but  an  inci- 
dent; the  making  of  the  loan  was 
the  principal  subject-matter  of  the 
agreement.  The  contract,  as  already 
said,  was  entire,  and  it  was  distinct- 
ly understood  and  agreed  that  the 
plaintiff  was  not  to  accept  the  policy 
unless  she  could  secure  the  loan. 
She  received  the  policy  into  her  pos- 
session upon  a  condition  that  the 
company  refused  to  perform,  and  be- 
cause of  this  failure  she  refused  to 
accept  it.  This  she  had  a  right  to 
do.  Upon  this  proposition  the  case 
of  Harnickell  v.  New  York  L.  Ins. 
Co.,  Ill  N.  Y.  390,  18  N.  E.  362,  is 
directly  in  point,  and  supports  our 
holding."  As  to  the  right  of  an  in- 
surance agent  under  such  a  statute 
to  contribute  his  commission,  see 
Quigg  v.  Coffy,  18  R.  I.  757,  36  Atl. 
704  (1894). 

8  People  v.  Formosa,  131  N.  Y.  478, 
30  N.  E.  492  (1892). 


§    128  THE    CONSIDERATION.  112 

Where  the  payment  is  made  a  condition  precedent  to  the  attaching  of 
the  risk,  and  it  is  not  made,  the  insured  assumes  no  further  liability ; 
but  if  the  contract  goes  into  effect  and  the  insured  has  had  the  benefit 
of  the  insurance,  the  premium  becomes  a  debt,  which  may  be  collected 
in  an  action  at  law.  A  premium  which  is  to  become  due  annually  or 
semi-annually,  and  is  payable  in  advance  on  a  contract  which  con- 
tains a  stipulation  that  the  policy  shall  lapse  if  the  premium  is  not 
paid  when  due,  is  not  a  debt.  So,  an  insurance  contract  with  a 
benevolent  association  which  provides  for  a  forfeiture  of  all  benefits 
if  a  member  fails  to  pay  his  assessment  at  a  specified  time  does  not 
create  an  obligation  which  is  enforceable  by  the  association  or  by  its 
receiver.9'  The  payment  in  such  case  is  optional  with  the  insured,  but 
if  the  policy  attaches  and  the  premium  is  earned  under  an  agree- 
ment of  credit,  as  where  a  note  is  given  for  the  premium,  a  debt 
is  created  which  may  be  recovered  even  after  the  policy  has  been  for- 
feited.10 

§  128.  Payment — Condition  precedent — Forfeiture. — The  actual 
payment  of  the  premium  before  the  risk  attaches  is  not  necessary  un- 
less such  payment  is  made  a  condition  precedent  by  the  terms  of  the 
contract.11  This  is  not  ordinarily  done  in  cases  of  marine  and  fire 
insurance,  but  is  customary  in  cases  of  life  insurance.12  When  it  is 

"Vick  v.   Clark,   77    111.   App.   599  Co.,   83   Iowa   647,   14   L.   R.  A.   248 

(1897).  (1891).     See  Continental  Ins.  Co.  v. 

10  Goodwin  v.  Massachusetts,  etc.,  Hulman,  92  111.  145,  34  Am.  Rep.  122. 

Ins.   Co.,   73   N.   Y.   480    (1878).     A  "Newark    Mach.    Co.    v.    Kenton 

mortgagee  may,  by  the  terms  of  the  Ins.  Co.,  50  Ohio  St.  549,  22  L.  R.  A. 

policy,   become   liable   for   the   pre-  768    (1893);    Campbell  v.  American 

mium:     See  St.  Paul,  etc.,  Ins.  Co.  P.  Ins.  Co.,  73  Wis.  100,  40  N.  W.  661 

v.  Upton,  2  N.  Dak.  229,  50  N.  W.  702  (1888).     Where  an  application  for  a 

(1891).     Sending  a  policy  to  the  as-  life   insurance  policy  states  on  its 

sured  on  his  promise  to  remit  the  face  that  payment  of  its  premium  is 

premium   does   not  estop   the   com-  a  condition  precedent  to  the  issuing 

pany  from  denying  its  validity  for  of  the  policy,  the  policy  is  not  in 

non-payment    of    the    premium    as  force  until  it  is  actually  paid:     Or- 

against  a  mortgagee,  "to  whom  loss,  mond  v.  Fidelity  L.  Ass'n,  96  N.  C. 

if  any,  is  payable,"  although  such  158  (1887).     See  Tomsecek  v.  Trav- 

mortgagee  received  the  policy  which  elers'  Ins.  Co.  (Wis.),  88  N.  W.  1013 

acknowledged  the  receipt  of  the  pre-  (1902). 

mium  from  the  assured  with  notice  u  Howell  v.  Knickerbocker  L.  Ins. 
that  the  premium  was  not  paid.  Co.,  44  N.  Y.  276  (1871).  Where 
Such  a  policy  is  not  an  insurance  payment  of  the  premium  on  or 
upon  the  interest  of  the  mortgagee:  before  a  certain  date  is  made  a  con- 
Union  Bldg.  Ass'n  v.  Rockford  Ins.  dition  precedent  to  the  contract  re- 


113  THE    PEEMIUM.  §    128 

expressly  provided  that  the  premium  on  a  life  insurance  policy  shall 
be  paid  on  or  before  a  certain  date,  and  in  default  thereof  the  policy 
shall  be  void,  the  non-payment  of  the  premium  on  the  date  named 
works  a  forfeiture  of  the  contract.13  In  such  cases  time  is  of  the 
essence  of  the  contract,  and  payment  on  the  following  day  will  not  do. 
Where  the  policy  so  provides,  the  prompt  payment  of  the  note  which 
has  been  given  for  the  premium  is  necessary  to  save  the  contract.1* 
Equity  will  not  release  from  such  a  forfeiture.15  Of  course,  the  com- 
pany may  extend  the  time  of  payment  by  an  agreement  express  or 
implied,  or  it  may  be  estopped  by  its  conduct  from  asserting  a  for- 
feiture, or  the  contract  may  be  suspended,  as  by  the  operation  of  war.16 
A  fraternal  society  doing  a  life  insurance  business  may  waive  the 
provisions  of  the  law  in  regard  to  the  forfeiture  of  the  insurance  by 
failure  to  require  payment  of  premiums  as  required  by  its  by-laws.17 
It  is  not  necessary  that  the  insurance  company  expressly  waive  its 
right  to  insist  upon  a  forfeiture,  as  a  waiver  may  be  implied  from 
the  circumstances.18  Part  payment  of  a  premium  will  not  prevent  a 
forfeiture.19  The  contract  sometimes  provides  that  it  shall  be  merely 
suspended  during  the  period  of  non-payment  of  the  premium,  and 
subject  to  revival  when  the  payment  is  actually  made.20  In  such 
cases  the  contract  ordinarily  contemplates  that  payment  must  be 
made  before  a  loss  occurs.21  In  some  states  it  is  provided  that  there 
can  be  no  forfeiture  of  a  policy  until  after  the  company  has  notified 
the  insured  of  the  time  when  his  premium  is  due.21a 

maining   in    force,    non-payment   is  "  McMahon  v.  Supreme  Tent,  etc., 

not  excused  by  the  fact  that  pay-  151  Mo.  522,  52  S.  W.  384  (1899). 

ment    is    prevented    by    conditions  18  Jones  v.  Preferred  Bankers'  L. 

over  which  the  insured  has  no  con-  Assur.  Co.,  120  Mich.  211,  79  N.  W. 

trol,  as  by  act  of  God.  204  (1899). 

13  Fowler  v.   Metropolitan   L.   Ins.  19  Willcuts   v.   Northwestern,   etc., 

Co.,  116  N.  Y.  389,  22  N.  B.  576,  5  L.  Ins.  Co.,  81  Ind.  300  (1882). 

R.    A.    805    (1889)    and    note;    Bos-  *°  Joliffe  v.  Madison  Mut.  Ins.  Co., 

worth  v.  Western,  etc.,  Soc.,  75  Iowa  39  Wis.  Ill,  20  Am.  Rep.  35  (1875). 

582,  39  N.  W.  903  (1888).  21  Matthews  v.  Ins.  Co.,  40  Ohio  St. 

"Robert    v.    New    England,    etc.,  135    (1883);    Miller   v.   Union,   etc., 

Ins.  Co.,  1  Disn.   (Ohio)  355  (1857),  Ins.  Co.,  110  111.  102   (1884). 

2  Disn.  106.  '"a  See  Mutual  L.  Ins.  Co.  v.  Hath- 

16  Klein  v.  Ins.  Co.,  104  U.   S.  88  away,  106  Fed.  816   (1901);   Mutual 

(1881);    Attorney-General  v.   Conti-  L.  Ins.  Co.  v.  Cohen,  179  U.  S.  262 

nental  L.  Ins.  Co.,  93  N.  Y.  70  (1883).  (1900). 

19  Mutual,  etc.,  Ins.  Co.  v.  Hillyard, 
37  N.  J.  L.  444  (1874). 

8 — ELLIOTT  INS. 


§    129  THE    CONSIDERATION.  114 

§  129.  Manner,  time  and  place  of  payment. — The  premium  may 
be  paid  to  the  company  or  its  duly  authorized  agent,22  and  may  be  in 
cash  or  in  any  other  commodity  which  the  insurer  is  willing  to  ac- 
cept.23 Presumably  it  is  payable  in  cash,  but  if  credit  is  given  it  is 
equally  as  effective  as  cash.  If  there  is  no  provision  making  the  pre- 
payment of  the  premium  a  condition  precedent,  the  agent  who  ne- 
gotiated the  insurance  may  give  credit  for  the  premiums,24  and  even 
where  a  provision  in  the  policy  calls  for  the  actual  payment  of  the  pre- 
mium as  a  condition  precedent  to  its  going  into  effect,  such  provision 
may  be  waived  by  a  general  agent  of  the  company.  Upon  this  the 
authorities  are  in  substantial  accord.25 

Where  a  policy  recites  that  it  is  issued  in  consideration  of  an  an- 
nual premium,  "to  be  paid  in  advance  to  the  company,"  the  bene- 
ficiary must  show  that  the  premium  was  paid,  and  it  is  not  sufficient 
to  show  merely  the  execution  of  a  promissory  note  for  the  amount, 
which  recites  that  it  is  accepted  on  condition  that  if  it  is  not  paid  at 
maturity  the  policy  shall  be  void.26  The  acceptance  of  an  order  on  a 
third  person  is  a  payment  if  such  was  the  intention  of  the  parties.27 
Payment  may  be  by  check  when  the  custom  and  course  of  dealing  have 
been  such  as  to  justify  the  insured  in  believing  that  it  would  be  ac- 
cepted as  cash.28  The  payment  of  the  premium  with  misappropriated 
funds  is  good  as  agamst  the  insurer,  although  the  fund  arising  from 
the  payment  of  the  policy  may  belong  to  the  person  whose  money  was 

22  Pennsylvania  Ins.  Co.  v.  Carter  pany,  pays  or  undertakes  to  become 
(Pa.),  11  Atl.  102  (1887).  responsible  to  the  company  for  the 

23  See  Anchor  L.  Ins.  Co.  v.  Pease,  premium,  in  order  that  credit  may 
44  How.  Pr.  (N.  Y.)  385  (1873).     An  be  extended  to  the  insured:     Fire- 
agent  can  not  without  express  au-  man's  Fund  Ins.  Co.  v.  Pekor,  106 
thority  accept  payment  in  personal  Ga.  1,  31  S.  E.  779  (1898). 
property:   Hoffman  v.  Hancock,  etc.,  w  McDonald  v.  Provident,  etc.,  L. 
Ins.  Co.,  92  U.  S.  164  (1895).  Assur.  Soc.,  108  Wis.  213,  84  N.  W. 

24  But  an  agent  without  authority  154   (1900).     See  Tomsecek  v.  Trav- 
to  issue  a  policy  can  not  bind  the  elers'  Ins.  Co.  (Wis.),  88  N.  W.  1013 
company  by  an  agreement  to  extend  (1902). 

the  time  of  payment:     Critchett  v.         w  Manhattan  L.  Ins.  Co.  v.  Myers 

American    Ins.    Co.,    53     Iowa    404  (Ky.),  59  S.  W.  30  (1900). 
(1880).     It  is  not  essential   to  the         27Lyon-v.  Travelers'   Ins.   Co.,  55 

validity  of  a  fire  insurance  policy,  Mich.  141,  54  Am.  Rep.  354   (1884); 

issued  in  renewal  of  a  previous  one,  National  Ben.  Ass'n  v.  Jackson,  114 

that  the  insured  should  pay  the  re-  111.   533    (1885);    McMahon  v.  Trav- 

newal    premium    in    cash,    provided  elers'  Ins.  Co.,  77  Iowa  229  (1899). 
the   insurance  agent,   with   the   ex-        28  Kenyon  v.  Knights,  etc.,  Ass'n, 

press  or  implied  assent  of  the  com-  122  N.  Y.  247,  25  N.  E.  299  (1890). 


115  THE    PREMIUM.  §    130 

illegally  used.29  Payment  may  be  made  by  any  one30  to  the  company 
or  its  authorized  agent31  at  the  time32  and  place  provided  by  the  policy, 
or  determined  by  special  agreement  or  custom.33  The  date  when  the 
premium  is  paid,  and  not  that  written  in  the  policy  for  the  payment 
of  the  premium,  is  the  time  from  which  to  reckon  the  period  when 
further  premiums  are  due. 

The  mere  acceptance  of  an  insurance  policy  will  not  imply  assent 
by  the  insured  to  a  clause  interpolated  in  the  policy  making  future 
premiums  payable  in  less  time  than  is  provided  in  the  original  con- 
tract between  the  parties,  unless  the  attention  of  the  insured  was 
called  to  such  provision.34  Where  the  course  of  dealing  has  been  such 
as  to  warrant  it,  payment  of  the  premium  may  be  made  by  mail,  and 
it  is  sufficient  if  the  check  was  mailed  on  the  last  day  of  payment.35 
When  the  insured  is  directed  to  send  the  money  by  express,  delivery 
to  the  express  agent  is  payment,  although  the  money  is  embezzled  by 
such  agent.36  Premiums  may  be  paid  in  part  or  in  whole  by  dividends 
accruing  according  to  the  terms  of  the  policy,37  but  undeclared  divi- 
dends can  not  be  treated  as  funds  applicable  to  such  use.38 

§  130.  The  giving  of  a  promissory  note. — The  insurance  company 
may  accept  a  promissory  note  in  payment  of  the  premium,  although 
the  contract  expressly  provides  for  the  payment  in  cash.39  A  pro- 

28  Holmes  v.  Oilman,  138  N.  Y.  369  v.  Continental  Ins.  Co.,  83  Ky.  574 

(1893).  (1886). 

30  Leslie  v.  French,  L.  R.   23   Ch.  M  McMaster  v.  New  York  L.   Ins. 

Div.  552   (1883).  Co.,   99   Fed.   856    (1899).     See   s.  c. 

"Critchett  v.  American  Ins.  Co.,  in  22  S.  Ct.  Rep.  10  (1901). 

53  Iowa  404,  36  Am.  Rep.  230  (1880).  3B  Taylor  v.  Merchants'  F.  Ins.  Co., 

88  In  determining  the  time  of  the  9  How.  (U.  S.)  390  (1850). 

notice  that  a  premium  will  fall  due  38JWhitley  v.   Piedmont,   etc.,   Ins. 

under  the  New  York  statute  provid-  Co.,  71  N.  C.  480  (1874). 

ing  for  a  notice  at  least  thirty  days,  3T  Hull  v.  Northwestern,  etc.,  Ins. 

and  not  more  than  sixty  days,  prior  Co.,  39  Wis.  397  (1876).     Equity  will 

to   the   day   when   the   premium   is  compel  the  application  of  dividends 

payable,     the    premium    is    to     be  earned     to     prevent    a     forfeiture: 

deemed  payable  on  the  day  of  its  Franklin  L.  Ins.  Co.  v.  Wallace,  93 

maturity,  and  not  the  date  to  which  Ind.  7  (1883),  and  cases  cited, 

an  extension  of  the  time  of  payment  ^  Mutual  L.  Ins.  Co.  v.  Girard  L. 

is  allowed  by  the  policy:     Trimble  Ins.  Co.,  100  Pa.  St.  172,  10  Ins.  Law 

v.  New  York  L.  Ins.  Co.,  20  Wash.  Jour.  273-275  (1882),  annotated. 

386,  55  Pac.  429  (1898).  33Krause   v.   Equitable   L.   Assur. 

83  Williams  v.  Washington  L.  Ins.  Co.,    99    Mich.    461,    58    N.    W.    496 

Co.,  31  Iowa  541   (1871);  Blackerby  (1894);    Pitt  v.  Berkshire  Ins.  Co., 

100  Mass.  500   (1868). 


§    130  THE    CONSIDERATION.  116 

vision  in  a  policy  that  it  shall  not  be  in  force  until  the  first  payment 
is  made  in  cash  during  the  life-time  and  good  health  of  the  insured 
is  complied  with  by  the  execution  of  a  note  to  the  insurance  com- 
pany's agent  for  an  amount  greater  than  the  premium,  where  the 
agent  indorsed  and  discounted  the  note,  gave  the  insured  the  com- 
pany's receipt  for  the  amount  of  the  premium,  reported  it  to  the  com- 
pany as  paid,  and  received  from  the  company  and  delivered  to  the 
insured  the  policy,  which  recited  that  it  was  given  in  consideration  of 
the  application  and  "of  the  first  premium  paid  on  or  before  the  de- 
livery hereof."40 

The  delivery  of  the  policy  is  a  sufficient  consideration  for  the  note.41 
Such  a  note  may  be  taken  as  payment,42  or  as  an  extension  of  the  time 
of  payment,  under  the  provision  that  the  insurance  shall  terminate  if 
the  note  is  not  paid  at  maturity,  or  it  may  be  accepted  as  a  condi- 
tional payment.43  If  neither  the  policy  nor  the  note  contains  a  pro- 
vision for  the  forfeiture  or  suspension  of  the  risk  upon  the  non-pay- 
ment of  the  note,  the  policy  continues  in  force  although  the  note  is  not 
paid  at  maturity.44  The  rights  of  the  parties  are  governed  by  the  terms 
of  the  agreement.  It  is  common  to  provide  that  the  policy  shall 
be  merely  suspended  while  the  note  is  overdue  and  that  the  company 
shall  not  be  liable  for  loss  occurring  during  such  suspension.45  There 
is  a  conflict  of  authority  as  to  whether  a  note  given  for  the  premium, 
and  containing  a  provision  to  the  effect  that  the  policy  shall  be  for- 
feited if  the  note  is  not  paid  at  maturity,  must  be  presented  for  pay- 
ment and  demand  made  before  the  policy  can  be  declared  void.40  It 
is  said  that  "when  the  condition  as  to  forfeiture  for  the  non-payment 
at  maturity  of  a  note  given  for  the  premium  is  contained  only  in  the 

"Jacobs  v.  Omaha  L.  Ass'n,  146  Phenix    Ins.    Co.    v.    Bachelder,    32 

Mo.  523,  48  S.  W.  462   (1898).  Neb.  490,  29  Am.  St.  443  (1891). 

"  Marskey  v.  Turner,  81  Mich.  62,  4fl  That  notice  and  demand  are  nec- 

45  N.  W.  644  (1890).  essary,    see    Pendleton    v.    Knicker- 

0  Michigan    Mut.    L.    Ins.    Co.    v.  bocker    L.     Ins.     Co.,     5     Fed.     238 

Bowes,  42  Mich.  19  (1879).  (1881);   Travelers'  Ins.  Co.  v.  Pull- 

**  Knickerbocker    L.     Ins.   Co.    v.  ing,    159    111.    603     (1896).     Contra, 

Pendleton,  112  U.  S.  696  (1884).  Roehner   v.   Knickerbocker   L.    Ins. 

"McAllister  v.  New  England,  etc.,  Co.,  63  N.  Y.  160   (1875);   Mclntyre 

Ins.  Co.,  101  Mass.  558  (1869).     The  v.  Michigan,  etc.,  Ins.  Co.,  52  Mich, 

forfeiture  clause  was  construed  to  188   (1883).     Protest  of  the  note  is 

apply  to  future  premium  payments  not    necessary:     Knickerbocker    L. 

only-  Ins.  Co.  v.  Pendleton,  112  U.  S.  696 

"Robinson  v.  Continental  Ins.  Co.,  (1884). 
76  Mich.  641,  43  N.  W.  647   (1889); 


117  THE   PREMIUM.  §    131 

note,  the  mere  fact  that  the  note  is  not  paid  at  maturity  does  not  of 
itself  avoid  the  policy.  Such  a  provision  is  a  condition  subsequent  of 
which  the  company  must  avail  itself  by  clear  and  unequivocal  acts. 
It  must  demand  payment  at  the  proper  time,  and  if  no  payment  is 
made  must  declare  the  policy  forfeited  or  void."47  Such  a  provision 
in  a  note  has  been  held  of  no  effect  whatever.48  The  company  or  its 
general  agent  may  accept  the  note  of  a  third  party  in  payment  of  the 
premium.49 

§  131.  f  Payment  after  loss  or  death. — If  credit  is  given  or  the 
time  to  pay  the  premium  is  extended  by  an  agreement  under  which  the 
policy  remains  in  force,  there  can  be  a  recovery  if  the  loss  or  death 
occurs  within  such  period  of 'extension.50 

The  company  is  under  no  obligation  to  accept  a  premium  tendered 
after  the  time  fixed  for  its  payment,  but  it  may  by  a  course  of  dealing, 
which  will  justify  the  insured  in  relying  thereon,  deprive  itself  of  the 
right  to  refuse  to  accept  payment  and  insist  upon  the  strict  adherence 
to  the  terms  of  the  original  contract.  But  in  order  to  establish  au- 
thority in  an  agent  to  receive  an  overdue  premium  after  the  death 
of  the  insured,  an  express  authority  to  do  so  conferred  upon  him  by 
the  company  must  be  shown.61 

The  death  or  loss  for  which  there  can  be  a  recovery  must  have  oc- 
curred before  the  premium  was  due  by  the  express  terms  of  the  con- 
tract, or  within  the  period  of  extension  created  by  the  conduct  of  the 
insurer  and  while  the  policy  was  in  force  and  not  suspended.52  It  is 
not  uncommon  for  insurance  companies  to  provide  for  a  certain 
period  known  as  days  of  grace  within  which  they  will  accept  pre- 
miums. Ordinarily  the  contract  provides  that  during  such  days  of 
grace  the  premium  will  be  accepted  upon  a  certificate  that  the  in- 
sured is  in  good  health  at  that  time.  Before  the  company  can  be 

47  See  Mutual  L.  Ins.  Co.  v.  French,  110  111.  102  (1884).    A  premium  sent 
30    Ohio    St.    240,    27    Am.    St.    443  after  a  loss  is  presumed  to  be  too 
(1876),  and  cases  there  cited.  late,  and  the  burden  of  proving  its 

48  Dwelling-House  Ins.  Co.  v.  Har-  acceptance  is  on  the  insured:  Moore 
die,  37  Kan.  674,  16  Pac.  92   (1887).  v.  Rockford  Ins.  Co.,  90  Iowa  636,  57 
See   Hastings   v.    Brooklyn   L.    Ins.  N.  W.  597  (1894). 

Co.,  138  N.  Y.  473  (1893);  Union,  B1  Lantz  v.  Vermont  L.  Ins.  Co., 

etc.,  Ins.  Co.  v.  Buxer,  62  Ohio  St.  139  Pa.  St.  546,  10  L.  R.  A.  577 

385,  57  N.  B.  66  (1900).  (1891),  and  cases  therein  cited. 

48  Franklin  L.  Ins.  Co.  v.  Wallace,  "Farnum  v.  Phoenix  Ins.  Co.,  83 

93  Ind.  7  (1883).  Cal.  246,  23  Pac.  869  (1890). 

60  Miller  v.  Union  Cent.  L.  Ins.  Co., 


§    132  THE    CONSIDERATION.  118 

required  to  accept  payment  after  the  death  of  the  insured  it  must 
very  clearly  appear  that  such  was  the  intention  of  the  parties.53  It 
is  not  to  be  presumed  that  an  insurer  intended  to  accept  an  over- 
due premium  after  the  death  of  the  insured,  unless  such  intention 
clearly  appears  from  the  terms  of  the  contract.54 

§  132.  Paid-up  policies. — Many  life  insurance  contracts  provide 
that  upon  the  payment  of  a  specified  number  of  premiums,  the  in- 
sured shall,  upon  certain  conditions,  be  entitled  to  a  paid-up  policy. 
The  rights  of  the  parties  under  such  policies  are  determined^  entirely 
by  the  provisions  of  the  contract  and  the  statutes  in  force  when  the 
policy  is  issued.55  It  is  generally  provided  that  the  insured  shall 
surrender  the  old  policy  within  a  specified  time  and  receive  a  new 
policy,  although  this  is  sometimes  effected  by  a  mere  indorsement 
upon  the  old  policy.56  By  the  weight  of  authority  the  right  must  be 
exercised  within  the  time  specified,57  although  it  has  been  held  that  it 
is  sufficient  if  this  is  done  within  a  reasonable  time.58  A  paid-up 
policy  may  be  subject  to  the  same  conditions  as  the  old,  or  it  may  be 
absolutely  non-forfeitable,  depending  entirely  upon  its  terms. 

§  133.  Premium  notes. — Under  some  statutes  premium  notes  are 
given  as  a  part  of  the  capital  stock  of  the  corporation.  These  must 
be  distinguished  from  promissory  notes  given  by  the  insured  as  a 
part  of  the  premium.  In  some  mutual  companies  premiums  are  paid 
partly  in  cash  and  partly  in  notes  upon  which  dividends  earned  by 
the  company  are  credited  and  assessments  made  from  time  to  time 
as  losses  occur.  ]STotes  given  as  a  part  of  the  capital  stock  of  a  mu- 
tual company,  in  the  absence  of  a  statutory  provision  to  the  con- 
trary, are  payable  absolutely  without  reference  to  losses,  and  may  be 

"See  Howell  v.  Knickerbocker  L.  (1886);   McQuitty  v.  Continental  L. 

Ins.  Co.,  44  N.  Y.  276   (1871);  Trus-  Ins.   Co.,   15   R.   I.   573,   10  All.   635 

tees  v.  Brooklyn  F.  Ins.  Co.,  19  N.  Y.  (1887). 

305  (1859);  Mutual  Ben.  L.  Ins.  Co.  57Knapp  v.  Homeopathic,  etc.,  Ins. 

v.  Ruse,  8  Ga.  534  (1850);  Pritchard  Co.,  117  U.  S.  411  (1885). 

v.  Merchants',  etc.,  Assur.  Soc.,  3  C.  "*  Bruce  v.  Continental  L.  Ins.  Co., 

B.  (N.  S.)  622   (1858).  58  Vt.  253    (1885).     As  to  the  right 

"  Mobile,  etc.,  Ins.  Co.  v.  Pruett,  74  to  a  paid-up  policy  without  paying 

Ala.  487  (1883).  outstanding  premium  note,  see  Van 

55  Mound    City,    etc.,    Ins.    Co.    v.  Norman  v.  Northwestern,  etc.,  Ins. 

Twining,  12  Kan.  475   (1872);   Han-  Co.,  51  Minn.  57   (1892);  Holman  v. 

ley  v.  Life  Ass'n,  69  Mo.  380  (1879).  Continental   L.    Ins.   Co.,   54   Conn. 

"  Holman  v.   Continental  L.   Ins.  195,  1  Am.  St.  97  (1886). 
Co.,    54    Conn.    195,    1    Am.    St.    97 


119  THE    PEEMIUM.  §    134 

transferred  and  negotiated  so  as  to  pass  a  good  title  to  the  transferee 
free  from  equities  existing  between  the  original  makers.59  But  the 
ordinary  premium  notes,  which  are  payable  only  upon  a  contingency, 
are  not  negotiable.60  Where  the  contract  so  provides,  the  maker  of 
a  premium  note  may  terminate  his  liability  thereon  for  future  losses 
by  rescinding  his  insurance  contract.  After  his  policy  is  canceled 
no  liability  exists  except  for  losses  which  had  already  occurred.61 

§  134.  Notice  of  time  when  premium  is  due. — In  the  absence  of  a 
statute  requiring  notice  to  the  insured  that  a  premium  will  become 
due  at  a  certain  time,  the  company  is  under  no  obligation  to  give 
such  notice,  unless  it  has  by  a  course  of  dealing  established  a  custom 
upon  which  the  insured  is  entitled  to  rely.  In  such  a  case  the  usage 
enters  into  and  forms  a  part  of  the  contract  between  the  parties,62  and 
it  is  generally  held  that  the  company  can  not  suddenly  cease  its  es- 
tablished practice  and  claim  a  forfeiture  of  the  policy.  But  the  cases 
are  not  all  in  harmony.  In  some  states  it  is  held  that  the  company 
may  discontinue  the  practice  of  sending  notice,  and  that  a  failure  to 
give  the  usual  notice  will  not  prevent  a  forfeiture  unless  it  is  done 
for  the  purpose  of  misleading  the  insured  and  avoiding  the  policy.63 
Where  a  statute  requires  notice  to  be  given,  the  burden  is  on  the  com- 
pany to  show  that  it  has  complied  with  the  statute.64  Such  a  re- 

69  White  v.  Haight,  16  N.  Y.  310  face   value   would   subject   some   of 

(1867).  them  to  more  than  the  extreme  limit 

80  Hope,  etc.,  Ins.  Co.  v.  Weed,  28  of  liability,  which  is  fixed  by  N.  H. 

Conn.  50  (1859).  Laws  1847,  ch.  501,  at  the  amount  of 

01  Langworthy  v.   Washburn,   etc.,  the  deposit  note :      New  Boston  F. 

Co.,    77    Minn.    256     (1899);     Amer-  Ins.  Co.  v.  Saunders,  67  N.  H.  249, 

ican  Ins.  Co.  v.  Garrett,  71  Iowa  243,  34  Atl.  670  (1892). 

32   N.  W.   356    (1887).     The  assess-  62  Manhattan  L.  Ins.  Co.  v.  Smith, 

ment  should  be  made  upon  the  bal-  44   Ohio   St.   156    (1886);    Attorney- 

ance  of  the  premium  note  remaining  General  v.  Continental  L.  Ins.  Co., 

unpaid:     Davis  v.  Oshkosh,  etc.,  Co.,  33  Hun    (N.  Y.)   138    (1884);    Grant 

82  Wis.  488,   52  N.  W.   771    (1892).  v.  Alabama,  etc.,  Ins.  Co.,  76  Ga.  575 

An  assessment  by  a  mutual  insur-  (1886). 

ance  company  may  be  based  on  the  •"  Smith  v.   National   L.   Ins.   Co., 

balance  due  on  the  premium  notes  103  Pa.  St.  177  (1883);  Girard  Life 

after  the  payment  of  previous   as-  Ins.,  etc.,  Co.  v.  Mutual  L.  Ins.  Co., 

sessments,      where      the      different  97  Pa.  St.  15   (1881).     See  also  Mu- 

classes  of  notes  constituting  the  as-  tual,  etc.,  Ass'n  v.  Essender,  59  Md. 

sets  of  the  company  have  previously  463  (1882). 

paid  assessments  varying  in  amount,  "*  Baxter  v.  Brooklyn  L.  Ins.  Co., 

and    another   assessment   upon    the  44  Hun  (N.  Y.)  184  (1887). 


§  134 


THE   CONSIDERATION. 


120 


quirement  must  be  strictly  complied  with.  Thus,  in  New  York,  where 
the  statute  provides  that  the  notice  shall  contain  a  statement  that 
"prompt  payment  is  necessary  to  keep  the  policy  in  force,"  it  is  not 
sufficient  to  give  a  notice  to  the  effect  that  in  default  of  payment  the 
policy  will  "become  forfeited  and  void."05  The  day  upon  which  the 
notice  was  mailed  should  be  excluded  in  the  computation  of  the  thirty 
days  for  which  notice  must  be  given  under  the  New  York  statute.68 
Where  the  requisite  notice  was  not  given,  and  the  policy  contained  a 
provision  for  forfeiture,  the  court  said:  "The  notice  given  before 
the  premium  fell  due  was  insufficient,  and  no  notice  whatever  was 
given  after  the  non-payment  of  that  premium.  The  effect  of  the 
prohibition  against  declaring  a  forfeiture  of  the  interest  of  the  as- 
sured under  the  contract  was  to  keep  the  policy  alive  as  a  valid  sub- 
sisting insurance,  notwithstanding  the  stipulations  of  the  parties  to 
the  contrary.  The  duration  of  the  policy,  so  long  as  it  was  domi- 


68  Phelan  v.  Northwestern,  etc., 
Ins.  Co.,  113  N.  Y.  147  (1889).  The 
New  York  statute  provides  that  "no 
life  insurance  company  doing  busi- 
ness in  the  state  of  New  York  shall 
have  power  to  declare  forfeited  or 
lapsed  any  policy  hereafter  issued 
or  renewed  by  reason  of  non-pay- 
ment of  any  annual  premium  or  in- 
terest, or  any  portion  thereof,  ex- 
cept as  hereinafter  provided.  When- 
ever any  premium  or  interest  due 
upon  any  such  policy  shall  remain 
unpaid  when  due,  a  written  or  print- 
ed notice  stating  the  "amount  of 
such  premium  or  interest  due  on 
such  policy,  the  place  where  said 
premium  or  interest  should  be  paid, 
and  the  person  to  whom  the  same  is 
payable,  shall  be  duly  addressed  and 
mailed  to  the  person  whose  life  is 
assured."  Omitting  the  description 
of  the  part  of  the  notice  for  the  pay- 
ment of  an  unpaid  premium,  and 
declaring  a  forfeiture  if  the  notice 
is  not  complied  with,  the  final  pro- 
viso reads:  "Provided,  however, 
that  a  notice  stating  when  the  pre- 
mium will  fall  due,  and  that  if  not 


paid  the  policy  and  all  payments 
thereon  will  become  forfeited  and 
void,  served  in  the  manner  herein- 
before provided,  at  least  thirty  and 
not  more  than  sixty  days  prior  to 
the  day  when  the  premium  is  pay- 
able, shall  have  the  same  effect  as 
the  service  of  the  notice  hereinbe- 
fore provided  for." 

66  Rosenplanter  v.  Provident,  etc., 
Soc.,  96  Fed.  721,  37  C.  C.  A.  566 
(1899).  The  notice  is  complete  on 
mailing  a  registered  letter  properly 
addressed  to  the  insured:  McKenna 
v.  State  Ins.  Co.,  73  Iowa  453  (1887). 
The  "date"  of  a  notice,  served  by 
mail,  of  an  assessment  in  a  mutual 
insurance  association,  when  the 
amount  of  the  assessment  is,  by  the 
rules  of  the  association,  to  be  paid 
within  a  certain  number  of  days 
from  the  "date  of  the  notice,"  is  not 
the  date  printed  in  the  notice  itself, 
but  is  the  day  on  which  the  notice  is 
mailed,  or  is  or  should  be  received 
by  the  member  in  due  and  regular 
course  of  mail:  Bridges  v.  Nat 
Union  (Minn.),  77  N.  W.  411  (1898). 


121  THE    PREMIUM.  §    135 

nated  by  the  statute,  was  not  dependent  upon  the  payment  of  pre- 
miums on  the  day  named  therein,  but  upon  payment  within  thirty 
days  after  the  statutory  notice  should  be  given.  The  only  way  in 
which  the  policy  could  be  terminated  under  the  statute  was  by  the 
failure  of  the  insured  to  pay  his  premium  upon  notice  "mailed" 
thirty  days  before  the  premium  was  due,  or  by  a  notice  of  default  and 
demand  for  payment  within  thirty  days  after  mailing  such  no+iee."67 

Where  the  statute  requires  certain  notice  before  the  maturity 
life  insurance  premium  as  a  condition  of  forfeiting  the  policy 
non-payment,  notwithstanding  stipulations  to  the  contrary  in  iae 
contract,  it  does  not  become  a  part  of  a  policy  issued  while  the 
statute  is  in  force  so  as  to  be  operative  after  the  statute  is  repealed. 
The  repeal  simply  permits  the  enforcement  of  the  conditions  of  the 
contract  according  to  its  own  terms  and  conditions.68 

§  135.  Right  to  recover  premiums  paid. — The  insurance  company 
has  no  right  to  the  consideration  until  the  contract  is  consummated 
by  the  assumption  of  the  risk.  But  where  the  risk  has  attached,  and 
the  contract  is  subsequently  forfeited  by  the  breach  of  a  condition, 
the  premiums  which  have  been  paid  can  not  be  recovered  back.69  If 
the  policy  was  void  ab  initio,  the  premiums  paid  may  be  recovered,  and 
a  premium  note  is  not  enforceable.70  Assessments  paid  for  a  series  of 
years  to  a  mutual  insurance  association  by  a  member  can  not  be  re- 
covered back  simply  because  he  failed  to  inform  himself  of  the  pro- 
visions of  the  contract.71  The  provision  in  an  application  for  a  policy 
of  life  insurance  that  the  statements  and  promises  of  the  agent  shall 
not  affect  the  rights  of  the  company,  unless  reduced  to  writing  and 
presented  with  the  application,  does  not  entitle  the  company  to  re- 
tain money  received  in  consequence  of  fraud  practiced  by  the  agent 
after  its  knowledge  of  the  fraud.  As  the  agent  had  practiced  fraud 
on  both  parties,  the  contract  was  held  voidable  at  the  instance  of  either 

n  Baxter  v.  Brooklyn  L.  Ins.  Co.,  70  Ford  v.  Buckeye  State  Ins.  Co., 

119  N.  Y.  450,  7  L.  R.  A.  293  (1890).  6  Bush   (Ky.)  133,  99  Am.  Dec.  663 

88  Rosenplanter  v.  Provident,  etc.,  (1869);   York  County,  etc.,  Ins.  Co. 

Soc.,  96  Fed.  721,  37  C.  C.  A.   566  v.  Turner,  53  Me.  225  (1865);  Home 

(1899),  and  cases  cited.  Ins.   Co.  v.   Daubenspeck,   115   Ind. 

69  Home  Fire  Ins.  Co.  v.  •Kuhlman,  306,  17  N.  B.  601  (1888). 

58  Neb.  488,  78  N.  W.  936    (1899),  "Condon   v.   Mutual,   etc.,   Ass'n, 

and   cases   cited;    United   States   L.  89  Md.  99,  42  Atl.  944  (1899). 
Ins.  Co.  v.  Smith,  92  Fed.  503,  34  C. 
C.  A.  506  (1899). 


§    136  THE   CONSIDERATION.  122 

party.72  Premiums  paid  upon  a  void  policy  may  be  recovered,  un- 
less the  insured  has  been  guilty  of  fraud.73  Thus,  where  a  daughter 
paid  the  premiums  on  the  life  of  her  father,  with  his  knowledge,  with 
the  understanding  that  she  had  an  insurable  interest  in  his  life,  she 
was  permitted  to  recover  the  premiums  as  money  paid  under  a  mis- 
take of  law.74  So,  where  a  wife,  without  the  consent  of  her  husband, 
procured  insurance  upon  his  life,  and  paid  the  premiums  out  of 
money  furnished  by  him  for  household  expenses,  the  husband  was 
permitted  to  recover  the  premiums,  although  the  company  did  not 
know  that  the  money  belonged  to  him.75 


II.     Assessments  in  Mutual  Companies  and  Benevolent  Societies. 

§  136.  Dues  and  assessments. — Many  questions  which  have  been 
before  the  courts  relating  to  dues  and  assessments  in  mutual  insur- 
ance companies  and  benevolent  societies  can  not  be  discussed  here. 
These  organizations  are  generally  regarded  as  insurance  companies.76 
They  are  organized  under  special  statutes,  which  provide  in  great  de- 
tail for  their  methods  of  doing  business,  and  these  statutes,  in  connec- 
tion with  their  by-laws  and  certificates,  govern  the  rights  of  the  par- 
ties. The  insured  becomes  a  member  of  the  organization,  and,  as  a 
consideration  for  the  insurance  and  other  benefits,  he  agrees  to  pay 
certain  dues  and  assessments,  to  be  levied  and  collected  in  accordance 
with  the  terms  of  his  contract.  In  mutual  companies  upon  the  as- 
sessment plan  the  insured  is  required  to  pay  from  time  to  time  to  the 
proper  authorities  such  sum  as  shall  be  assessed  under  the  by-laws 
for  the  purpose  of  paying  losses  and  expenses.77  If  a  premium  note 

71  McKay  v.  New  York  L.  Ins.  Co.,  76  See  Penn  Mut.,  etc.,  Co.  v.  Me- 
124  Cal.  270,  56  Pac.  1112  (1899).  chanics',  etc.,  Co.,  19  C.  C.  A.  286,  72 

73  Jones  v.  Insurance  Co.,  90  Tenn.     Fed.  413  (1896). 

604,  18  S.  W.  260  (1891).  7T  Ellerbe  v.  Barney,  119  Mo.  632, 

74  Metropolitan     L.     Ins.     Co.     v.  25  S.  W.  384  (1893).     As  to  the  vari- 
Blesch   (Ky.),  58  S.  W.  436    (1900).  ous  plans,   see  Crossman  v.  Massa- 
See  also  Mutual  I..  Ins.  Co.  v.  El-  chusetts  Ben.  Ass'n,  143  Mass.  435,  9 
liott,    93    Tex.    144,    53    S.    W.    1014  N.  E.  753  (1887);  In  re  La  Solidar- 
(1899);    Stilwell  v.   Covenant,   etc.,  ite,  etc.,  Ass'n,  68  Cal.  392    (1886). 
Ins.  Co.,  83  Mo.  App.  215  (1900).  As  to  the  distinction  between  a  pre- 

75  Metropolitan     L.     Ins.     Co.     v.  mium  and  an  assessment,  see  State 
Smith  (Ky.),  59  S.  W.  24,  53  L.  R.  A.  v.  Monitor  F.  Ass'n,  42  Ohio  St.  555 
817  (1900).  (1885). 


123  THE    PREMIUM.  §    137 

is  given,  the  assessment  is  made  upon  the  note,  and  can  not  exceed 
the  maximum  liability  as  expressed  thereby.78  The  rate  of  assess- 
ment may  be  determined  by  the  proper  authorities  according  to  the 
losses  and  expenses,  or  it  may  be  previously  determined  and  inserted 
in  the  contract.  It  may  be  subject  to  increase  by  vote  of  the  stock- 
holders, and  a  member  who  assents  to  an  increase  in  his  assessment 
by  voting  therefor  in  a  stockholders'  meeting  can  not  thereafter 
complain  that  it  is  unreasonable.79 

§  137.  Liability  to  assessment. — The  liability  for  assessments 
rests  upon  those  who,  by  becoming  members  of  the  company,  assume 
the  contractual  obligation  imposed  by  its  by-laws.80  Such  liability 
must  grow  out  of  the  contract  or  statute,81  and  where  the  statute  fixes 
it  at  a  certain  amount  it  can  not  be  limited  to  a  less  amount  by  a 
special  agreement.  If  the  liability  is  absolute  and  certain,  an  action 
may  be  maintained  against  a  member  for  its  enforcement,  but  the  rule 
is  otherwise  if  the  liability  terminates  with  the  forfeiture  of  the 
rights  of  the  member.82 

§  138.  Effect  of  non-payment  of  assessment. — The  non-payment  of 
an  assessment  may  result,  ipso  facto,  in  the  forfeiture  of  the  rights  of 
the  member  as  a  beneficiary,  or  merely  in  his  suspension  from  the 
rights  and  privileges  of  membership.  Where  it  is  expressly  provided 
that  such  non-payment  shall  result  in  suspension  or  forfeiture,  no 

78  Davis  v.   Oshkosh,   etc.,   Co.,   82  company  and   under  whom  the  in- 
Wis.  488,  52  N.  W.  771  (1892).  sured  does  not  claim  any  right,  title, 

79  Mutual,    etc.,    Ass'n    v.    Taylor  or   interest  in  the   property  where 
(Va.),  37  S.  E.  854  (1901).  the  liability  for  assessments  is  pure- 

80  Com.  v.  Massachusetts,  etc.,  Ins.  ly    personal:     Monger    v.    Rocking- 
Co.,  112  Mass.  116  (1873);  Tolford  v.  ham,   etc.,   Ins.   Co.,   96  Va.   442,   31 
Church,  66  Mich.  431,  33  N.  W.  913  S.  E.  609    (1898).     It  is  no  defense 
(1887).  to   an    action   on   a   premium   note 

81  Com.  v.  Massachusetts,  etc.,  Ins.  given  by  the  insured,  that  an  agent 
Co.,  112  Mass.  116  (1873).  of  the  company,  who  had  no  author- 

83  Tolford  v.  Church,  66  Mich.  431,  ity  to  bind  it  to  pay  the  cash  sur- 

33  N.  W.  913  (1887);  Ellerbe  v.  Bar-  render  value  of  an  old  policy,  told 

ney,    119    Mo.    632,    25    S.    W.    384  the  insured  that  there  would  be  "no 

(1893).     One  to  whom  a  certificate  trouble"    about    getting    such    cash 

of   fire   insurance   is   issued   is   not  surrender  value,  as  it  is  the  mere 

liable    for    assessments    theretofore  expression   of  an   opinion:     Garber 

made  against  a  person  in  control  of  v.   Bresee,   96  Va.  644,  32   S.  E.  39 

the  property,  who  held  a  separate  (1899). 
certificate    of    membership    in    the 


§    139  THE    CONSIDERATION.  12 1 

affirmative  action  on  the  part  of  the  association  or  lodge  is  necessary.83 
But  where  the  fundamental  law  provides  that  upon  non-payment  a 
member  shall  be  suspended  by  the  proper  authorities,  his  membership 
is  not  affected  until  the  power  thus  conferred  is  exercised.84  When 
the  annual  assessment  is  required  to  be  paid  on  a  day  certain,  but  the 
assured  does  not  know  the  exact  amount  because  of  dividends  which 
he  is  entitled  to  have,  applied,  there  can  not  be  a  forfeiture  until  no- 
tice has  been  given  him.85 

'§  139.  Withdrawal  of  member. — A  member  of  a  mutual  or  benevo- 
lent insurance  company  may  generally  withdraw  at  pleasure,  and 
thus  relieve  himself  from  liability  for  assessments  for  further  losses, 
but  he  remains  liable  for  assessments  thereafter  made  for  the  pur- 
pose of  paying  losses  which  had  occurred  while  he  was  a  member.86 

§  140.  Insolvency  of  company. — Upon  the  insolvency  of  the  com- 
pany, any  receiver  may  levy  assessments  upon  such  as  under  the  con- 
tract are  absolutely  liable  for  losses  of  the  company,  but  not  upon 
such  as  are  relieved  from  further  liability  by  forfeiture  of  their 
rights.87  The  obligation  upon  a  premium  note  is  not  affected  by  the 
insolvency  of  the  company,  and  the  receiver  may,  under  the  authority 
of  the  court,  within  the  terms  of  the  contract,  make  such  assessments 

^Mandego     v.     Centennial,     etc.,  Harker    (N.    Dak.),    84    N.   W.    369 

Ass'n,  64  Iowa  134   (1884);   Mueller  (1900). 

v.  Grand  Grove,  etc.,  69  Minn.  236,  M  Scheufler    v.    Grand    Lodge,    45 

72   N.   W.   48    (1897);    Goodman   v.  Minn.    256,    47    N.    W.    799    (1881). 

Jedidjah  Lodge,  67  Md.  117  (1887);  Effect  of  suspension  of  subordinate 

Hansen  v.  Supreme  Lodge,  140  111.  lodge:     Young  v.  Grand  Lodge,  173 

301    (1897);    Burdon    v.    Massachu-  Pa.  St.  302,  33  Atl.  1038  (1896). 

setts,    etc.,    Ass'n,    147    Mass.    360  « Phoenix  Ins.  Co.  v.  Doster,  106 

(1888).     Where  a  member  of  a  mu-  U.  S.  30  (1882). 

tual    insurance    company   has    obli-  *  Langworthy  v.  Washburn,  etc., 

gated   himself  to  pay  such  annual  Co.,  77  Minn.  256  (1899);  Ionia,  etc., 

assessments  as  shall  be  made,  not  to  Ins.  Co.  v.  Otto,  96  Mich.  558,  56  N. 

exceed  a  specified   sum  each  year,  W.  88  (1893);  Detroit,  etc.,  Ins.  Co. 

and  in  anticipation  of  an  annual  as-  v.  Merrill,  101  Mich.  393,  59  N.  W. 

sessment  pays  to  the  treasurer  the  661    (1894).     Upon  the  termination 

amount  of  an  annual  assessment  in  of   the   contract   for   insurance   the 

advance,  and  such  assessment  is  not  premium  note  becomes  void:  Mound 

in  fact  made,  the  sum  so  paid  stands  City,  etc.,  Ins.  Co.  v.  Curran,  42  Mo. 

to  his  credit,  and  he  has  a  right  to  374  (1868). 

apply  the  same  on  an  assessment  for  87  Bacon  v.  Clyne,  70  Mich.  183,  38 

a  succeeding  year:     Montgomery  v.  N.  W.  207  (1888). 


125 


THE    PREMIUM. 


141 


as  are  necessary  to  meet  the  losses  and  expenses.88  The  facts  neces- 
sary to  authorize  the  assessment  must  be  determined,  and  this  must 
be  made  to  appear  affirmatively  in  an  action  brought  by  the  receiver 
to  enforce  the  assessment.89  Such  an  assessmfent  may  include  the 
amount  necessary  to  cover  the  expenses  of  the  receivership.90 

§  141.  Death  during  period  of  suspension. — There  can  be  no  re- 
covery for  a  loss  which  occurs  during  a  period  of  suspension  from 
membership,91  but  a  member  is  protected  during  the  period  allowed 
by  the  contract  for  the  payment  of  the  assessment.92  A  payment  after 
the  death  of  the  insured,  which  is  accepted  by  the  association  without 
knowledge  of  the  death,  is  of  no  effect.93  But  if  such  payment  is  ac- 
cepted with  full  knowledge  of  all  facts,  it  may  render  the  association 
liable.94 

§  142.  Reinstatement. — Contracts  which  provide  for  forfeiture  or 
suspension  for  non-payment  of  dues  generally  contain  a  condition  for 
reinstatement  upon  making  payment  and  complying  with  certain  re- 
quirements,95 such  as  producing  a  certificate  of  good  health.96  The 


83  Tolford  v.  Church,  66  Mich.  431, 
33  N.  W.  913  (1887);  In  re  Minneap- 
olis, etc.,  Ins.  Co.,  49  Minn.  291,  51 
N.  W.  921  (1892).  In  this  case  the 
premium  notes  which  constituted 
the  "contingent  fund"  were  a  part 
of  the  capital  of  the  company  re- 
quired by  act  of  1885. 

8a  See  Seamans  v.  Millers'  Mut. 
Ins.  Co.,  90  Wis.  490,  63  N.  W.  1059 
(1895);  In  re  Equitable,  etc.,  Ass'n, 
131  N.  Y.  354  (1892). 

90  Davis  v.  Shearer,  90  Wis.  250,  62 
N.  W.  1050  (1895);  Seamans  v.  Mil- 
lers' Mut.  Ins.  Co.,  90  Wis.  490,  63 
N.  W.  1059  (1895).  For  a  statement 
of  the  general  principles  which 
must  govern  assessments  on  pre- 
mium notes,  see  Swing  v.  H.  C.  Ake- 
ley  L.  Co.,  62  Minn.  169,  64  N.  W.  97 
(1895). 

81  Blanchard  v.  Atlantic,  etc.,  Ins. 
Co.,  33  N.  H.  9  (1856);  Brown  v. 


Grand  Council,  81  Iowa  400,  46  N. 
W.  1086   (1890). 

92  Painter  v.   Industrial  L.  Ass'n, 
131    Ind.    68,    30    N.    E.    876    (1891) 
[ordinary  life  policy]. 

93  Miller  v.  Union  Cent.  L.  Ins.  Co., 

110  111.  102  (1884). 

94Erdmann  v.  Mutual  Ins.  Co.,  44 
Wis.  376  (1878). 

95  Manson     v.     Grand     Lodge,     30 
Minn.  509    (1883).     A  lapsed  policy 
can  only  be  revived,  so  far  as  the 
insured  is  concerned,  by  the  actual 
payment  and  acceptance  of  the  pre- 
mium, or  by  a  contract  based  upon 
a  sufficient  consideration:     Lantz  v. 
Vermont  L.  Ins.  Co.,  139  Pa.  St.  546, 
10  L.  R.  A.  577    (1891),  and  cases 
therein  cited. 

96  French   v.    Mutual,    etc.,    Ass'n, 

111  N.  C.  391,  32  Am.  St.  803  (1892); 
Jones  v.  Preferred,  etc.,  Assur.  Co., 
120  Mich.  211,  79  N.  W.  204  (1899). 
See  note,  3  Am.  St.  634. 


§    143  THE    CONSIDERATION.  126 

acceptance  of  an  assessment  during  the  period  of  suspension,  with  a 
full  knowledge  of  all  facts,  in  itself  reinstates  a  member.97 

§  143.  Waiver — Estoppel. — The  insurer  may  expressly  or  by  im- 
plication waive  strict  compliance  with  the  requirement  that  dues  and 
assessments  shall  be  paid  within  a  specified  time.  The  tendency  of 
the  courts  is  to  protect  the  members  of  such  associations  from  for- 
feiture of  their  rights.  As  said  by  the  supreme  court  of  Minnesota,98 
"The  defendant  had  by  its  conduct  led  him  to  suppose  and  believe 
that  a  default  of  two  or  three  months  in  any  one  payment  would  not 
affect  his  standing  as  a  member,  or  his  right  and  interest  in  the  fund 
out  of  which  his  beneficiary  would  be  paid  in  case  of  his  decease. 
The  defendant  could  not,  after  long  continued  conduct  of  this  nature, 
by  which  he  was  lulled  into  the  conviction  that  his  delay  was  unobjec- 
tionable and  his  good  standing  unaffected,  suddenly  and  without  no- 
tice insist  upon  a  forfeiture,  and  that  he  was  no  longer  in  good  stand- 
ing, and  had  forfeited  all  his  rights  and  privileges."  The  court  said 
that  the  general  rule  was  that  "if  the  company  has,  by  its  course  of 
conduct,  acts  or  declarations,  misled  the  insured  in  any  way  in  re- 
gard to  the  payment  of  premiums,  or  created  a  belief  on  the  part  of 
the  insured  that  strict  compliance  with  the  letter  of  the  contract  as 
to  the  payment  of  the  premiums  on  the  day  stipulated  will  not  be 
exacted,  and  the  insured,  in  consequence,  fails  to  pay  on  the  day  ap- 
pointed, the  company  will  be  held  to  have  waived  the  requirement 

87  Sweetser   v.    Odd    Fellows,   etc.,  account  of  failure  to  pay  according 
Ass'n,    117    Ind.    97,    19    N.    E.    722  to  the  stipulations  therein  written. 
(1888).  Thompson  v.  Insurance  Co.,  104  U. 

88  Mueller    v.     Grand     Grove,     69  8.252(1881).     But  such  a  course  of 
Minn.    236,    72    N.    W.    48     (1897).  dealing  may  be  shown  as  will  estop 
In    Sweetser   v.    Odd   Fellows,    etc.,  the  company  to  show  that  there  was 
Ass'n,  117  Ind.  97   (1888),  the  court  any  agreement  after  it  has  permitted 
said:     "It  is  quite  true  that  mere  its  policy  to  stand  open  and  uncan- 
occasional    indulgence    on   the    part  celed  after  it  has  accepted  payment 
of  the   insurance   company,   in   the  of  overdue  premiums  or  assessments 
absence   of   an   express   or   implied  in   a   specified   manner,   which   has 
agreement    to    waive    payment    of  been  conformed  to  during  the  life- 
the   assessments    according    to    the  time  of  the  assured."  See  also  Rich- 
conditions  of  the  contract,  can  not  wine    v.    LaCrosse,    etc.,    Ass'n,    76 
justly  be  construed  as  a  permanent  Minn.    417,   79    N.    W.    504    (1899); 
waiver  or  as  depriving  the  company  Jones  v.  Preferred,  etc.,  Assur.  Co., 
of  the  right  to  insist  upon  a  for-  120  Mich.  211,  79  N.  W.  204  (1899). 
feiture,   or  to  cancel   its  policy  on 


127  THE    PREMIUM.  §    143 

and  is  estopped  from  setting  up  the  condition  as  a  cause  of  forfeit- 
ure." 

Where  the  constitution  and  by-laws  of  a  mutual  benefit  association 
limit  and  define  the  powers  of  the  officers  and  forbid  the  alteration  or 
amendment  of  such  constitution  except  by  the  governing  body,  in  the 
manner  therein  provided,  and  the  by-laws  provide  that  the  member 
must  pay  the  assessment  within  a  specified  time,  and  no  further  or 
other  notice  need  be  given,  it  was  held  that  the  secretary  could  not 
waive  such  provisions."  There  are  numerous  cases  which  hold  that 
the  officers  of 'such  a  concern  can  not  waive  by-laws  which  relate  to  the 
substance  of  the  contract.100 

90  Kocher  v.  Supreme  Council  (N.  Ins.  Co.,  152  Mass.  272,  25  N.  B.  289 
J.),  52  L.  R.  A.  861  (1901).  (1890);  Niblack  Mut.  Ben.  Soc.  (2d 

100  McCoy    v.    Roman    Cath.,    etc.,     ed.)  195. 


PART  V. 

AGENCY,  WAIVER  AND  ESTOPPEL 


CHAPTER  VIII. 

INSURANCE  AGENTS  AND  THE  GENERAL  RULES  OF  AGENCY. 
SEC.  SEC.  . 

150.  In  general.  160.  Limitations    on    authority    of 

151.  Statutory  provisions  relating  to  agent. 

insurance  agents.  160a.  Limitations     on     authority — 

152.  Construction  of  such  statutes.  Continued. 

153.  Evidence  of  agency.  161.  Limitations  contained  in  appli- 

154.  Character  of  the  agency.  cation — Constructive  notice. 

155.  Various  special  agents.  162.  Preparation  of  application. 

156.  Sub-agents  and  clerks.  163.  Provisions  restricting  power  of 

157.  Insurance  brokers.  officers  and  general  agents. 

158.  Powers  of  agents.  164.  Notice. 

159.  Restrictions   in   application  or     165.  Notice  of  loss  to  local  agent. 

policy.  166.  Rights  and  liabilities  of  agent. 

§  150.  In  general. — In  modern  times  almost  all  insurance  is  un- 
derwritten by  corporations,  which  necessarily  act  through  their  officers 
and  other  agents.  The  powers  and  duties  of  the  corporate  officers  are 
governed  by  the  general  law  of  corporations  and  agency,  to  which  the 
reader  is  referred  for  a  full  discussion.  In  a  large  measure  this  is  also 
true  of  the  principles  governing  insurance  agents ;  and  in  a  work  of  the 
scope  of  the  present  volume  it  is  only  necessary  to  summarize  these 
rules  and  refer  to  the  statutory  and  other  modifications  affected  by 
the  nature  of  the  contract  and  the  conditions  under  which  it  is  en- 
tered into.  These  general  rules  apply  to  agents  of  all  kinds  of  in- 
surance companies,  and  generally  to  individuals  who  are  engaged  in 
business  as  insurers. 

As  the  words  are  commonly  used,  an  insurance  agent  is  a  person 
employed  by  an  insurance  company  to  solicit  risks  and  effect  insur- 

(128) 


129          INSURANCE   AGENTS   AND   GENERAL   RULES    OF    AGENCY.     §    151 

ance,  collect  and  transmit  premiums,  and  in  general  to  represent  the 
insurer  in  the  solicitation,  consummation  and  adjustment  of  the  con- 
tract. It  applies  equally  to  one  who  represents  the  insured.1 

§  151.    Statutory  provisions  relating  to  insurance  agents. — The 

attempts  of  insurance  companies  to  escape  responsibility  for  the  acts 
of  their  agents  by  inserting  provisions  in  their  applications  and  con- 
tracts limiting  the  powers  of  their  agents,  and  providing  that  the 
person  taking  the  application  shall  be  regarded  as  the  agent  of  the 
applicant,  have  led  to  the  enactment  of  statutes  defining  who  are  in- 
surance agents  and  determining  their  powers.  These  statutes  pro- 
vide that  a  local  or  traveling  agent  engaged  in  taking  applications 
for  insurance  shall  be  deemed  the  agent  of  the  insurer  and  as  rep- 
resenting it,  and  not  the  insured,  in  connection  with  all  statements 
made  in  the  application.2  It  is  also  common  to  require  insurance 
agents  to  procure  a  license,  and  in  some  instances  it  is  made  a  crim- 
inal offense  to  solicit  insurance  without  having  such  a  license,3  or 
to  act  as  agent  for  an  insurance  company  which  has  not  procured  a 
certificate  of  authority  to  do  business  within  the  state.4  The  business 
of  insurance  is  of  such  a  nature  that  the  state  may  impose  restric- 
tions upon  it,  and,  if  thought  advisable,  prohibit  individuals  from 
engaging  in  it.5  Where  individuals  are  permitted  to  become  insurers, 
the  state  may  impose  the  same  restrictions  upon  their  agents  as  upon 
the  agents  of  corporations  engaged  in  the  same  business.  It  has 
been  noted  that  foreign  insurance  corporations  may  be  excluded  from 
a  state,  or  permitted  to  engage  in  business  therein  upon  such  condi- 
tions as  the  state  chooses  to  impose.  But  individual  citizens  of  other 

1  That  the  rule  is  the  same  in  deal-  New  York  L.  Ins.  Co.,  78  Fed.  33 
ing  with  the  agents  of  mutual  and  (1897);  Bankers'  L.  Ins.  Co.  v.  Rob- 
stock  insurance  companies,  see  Kau-  bins,  55  Neb.  117,  75  N.  W.  585 
sal  v.  Minnesota,  etc.,  Ins.  Co.,  31  (1898);  Continental  L.  Ins.  Co.  v. 
Minn.  17,  47  Am.  Rep.  776  (1883);  Chamberlain,  132  U.  S.  304  (1889). 
Whitney  v.  National,  etc.,  Ass'n,  57  See  also  Continental  Ins.  Co.  v. 
Minn.  472,  59  N.  W.  943  (1894);  Ruckman,  127  111.  364,  11  Am.  St. 
Cumberland  Valley,  etc.,  Co.  v.  121  (1889). 

Schell,  29  Pa.  St.  31  (1857);  Frank-  8  See  State  v.  Hosmer,  81  Me.  506 

lin  F.  Ins.  Co.  v.  Martin,  40  N.  J.  L.  (1889). 

568,  579  (1878).  « In  re  Hogan  (N.  Dak.),  78  N.  W. 

•Vermont  Rev.  Laws  1880,  §  3620;  1051,  45  L.  R.  A.  166  (1899). 

Iowa  Rev.  St.  1888,  §  1732,  quoted  B  Com.  v.  Vrooman,  164  Pa.  St.  306, 

and  commented  on  in  McMaster  v.  25  L.  R.  A.  250  (1894). 
9 — ELLIOTT  INS. 


§    152  AGENCY,    WAIVER    AND   ESTOPPEL.  130 

states  who  are  permitted  to  engage  in  the  business  of  insurers  may 
only  be  subjected  to  such  restrictions  and  conditions  as  are  imposed 
upon  citizens  of  the  same  state*  of  equal  standing  and  merit.6 

An  insurance  solicitor  who  places  a  risk  through  brokers  in  another 
state,  without  knowing  by  what  company  it  was  taken,  is  not  relieved 
from  liability  under  the  statute  authorizing  the  recovery  of  the  loss 
from  persons  who  act  as  agents  of  unlicensed  foreign  companies.7 

§  152.  Construction  of  such  statutes. — In  Iowa  it  is  provided  that 
''any  person  who  shall  hereafter  solicit  insurance,  or  procure  appli- 
cations therefor,  shall  be  held  to  be  the  soliciting  agent  of  the  insur- 
ance company  or  association  issuing  the  policy  on  such  application, 
or,  on  a  renewal  thereof,  anything  in  the  application  or  policy  to  the 
contrary  notwithstanding."8  This  act  was  held  to  apply  to  all  kinds 
of  insurance,9  and  to  be  intended  to  settle,  as  between  the  parties  to 
the  contract,  the  stat-us  of  the  party  through  whom  negotiations  are 
conducted.  Its  object  was  to  cut  out  the  class  of  defenses  interposed 
under  the  provisions  which  many  companies  inserted  in  their  appli- 
cations and  policies,  to  the  effect  that  the  agent  by  whom  the  appli- 
cation was  procured  should  be  regarded  as  the  agent  of  the  insured.10 
The  supreme  court  of  the  United  States  held11  that  by  force  of  this 
statute  a  person  procuring  an  application  for  life  insurance  is  the 
agent  of  the  company,  and  can  not  be  converted  into  the  agent  of 
the  insured  by  any  provision  in  the  application.  Such  an  agent  is 
under  no  obligation  to  aid  in  filling  out  an  application,  and  if  he  does 
so  and  gives  advice  as  to  the  character  of  the  answers  given,  his  acts 
are  the  acts  of  the  company. 

'State  v.  Stone,  118  Mo.  338,  25  therefor    shall    be    held    to    be   the 

L.  R,  A.  243  (1893).    As  to  restric-  agent  of  the  party  thereafter  issu- 

tions   upon    insurance    by   unincor-  ing  the   policy   upon   such   applica- 

porated   associations   from   another  tion,  or  a  renewal  thereof,  anything 

state,  see  note,  25  L.  R.  A.  238.  in  the  application  or  policy  to  the 

1  Noble  v.  Mitchell,  100  Ala.  519,  contrary  notwithstanding."    Similar 

25  L.  R.  A.  238  (1893).  provisions  are  found  in  other  states. 

8  Iowa    Laws    1880,    ch.    211.     By  9Cook  v.   Federal  Life  Ass'n,   74 
Minn.  Laws  1895,  ch.  175,  §  88,  such  Iowa  746  (1887). 
agent  is  made  the  agent  of  the  com-  10  St.  Paul,  etc.,  Ins.  Co.  v.  Sharer, 
pany   for  the  purpose  of   receiving  76  Iowa  282  (1888). 
the  premium.     Section  25  provides  "  Continental  Ins.  Co.  v.  Chamber- 
that  "any  person  who  solicits  insur-  lain,  132  U.  S.  304  (1889). 
ance   and   procures  the   application 


131  INSURANCE   AGENTS   AND   GENERAL   RULES    OF   AGENCY.      §    153 

§  153.  Evidence  of  agency. — The  fact  and  character  of  the  agency 
may  be  shown  by  any  competent  evidence ;  such  as  an  express  contract 
between  the  agent  and  his  principal,  the  holding  out  or  recognition  of 
the  part}r  as  his  agent,12  the  possession  of  papers  such  as  policies  ex- 
ecuted in  blank,  which  an  insurance  company  would  furnish  ordinarily 
only  to  its  agents  ;13  and  generally  by  the  existence  of  a  state  of  facts 
from  which  agency  would  be  inferred  as  a  matter  of  law,14  or  as  a 
mixed  question  of  law  and  fact.15  Thus,  a  person  soliciting  insurance 
and  taking  the  application,  in  the  absence  of  notice  to  the  insured  of 
limitations  upon  his  authority,  will  be  deemed  the  agent  of  the  com- 
pany which  accepts  the  application,  issues  the  policy  and  retains  the 
premium.16  But  an  agent's  apparent  authority  to  bind  his  principal 
must  be  based  on  something  tangible;  such  as  the  possession  by  the 
agent  of  blank  policies  signed  by  the  officers  of  the  company,  or  some 
other  act  of  the  company,  such  as  permitting  the  party  to  continue 
business  after  it  has  notice  that  he  is  representing  himself  as  its 
agent.17 

§  154.  Character  of  the  agency. — The  nature  of  the  agency  in 
each  case  depends  upon  the  terms  of  the  employment  and  the  charac- 
ter of  the  business  to  be  transacted.  As  between  the  principal  and 
the  agent,  or  the  principal  and  persons  dealing  with  the  agent,  with 

"List  v.  Commonwealth,  118  Pa.  don,  etc.,  Ins.  Co.  v.  Gerteisen  (Ky.), 

St.  322,  328  (1888);  Enos  v.  St.  Paul,  51  S.  W.  617  (18&9). 

etc.,  Ins.  Co.,  4  S.  Dak.  639,  46  Am.  "Possession    of    blanks    as    evi- 

St.  796   (1894);   Parker  v.  Citizens'  dence,    see    Dickerman    v.    Quincy, 

Ins.  Co.,  129  Pa.  St.  583  (1889)  [affi-  etc.,  Ins.  Co.,  67  Vt.  609  (1895). 

davit  of  alleged  agent  used  in  liti-  14  Sellers   v.    Commercial   P.    Ins. 

gation];  Schreiber  v.  German-Amer.,  Co.,   105   Ala.   282    (1894);    Indiana 

etc.,  Ins.  Co.,  43  Minn.  367    (1890)  Ins.   Co.  v.   Hartwell,  123   Ind.  177 

[admission    by    president    of    com-  (1889);  Duluth  Nat.  Bank  v.  Knox- 

pany].     A  company  which  has  rati-  ville  F.  Ins.  Co.,  85  Tenn.  76,  4  Am. 

fled  the  acts  of  a  person  in  writing  St.   744    (1886);    Allen   v.    German- 

an  application  for  insurance,  by  ac-  Amer.  Ins.  Co.,  123  N.  Y.  6  (1890). 

cepting  it  and  issuing  a  policy  there-  15  Lumbermen's    Mut.    Ins.    Co.    v. 

on,    can    not    thereafter    repudiate  Bell,   166   111.   400,   57   Am.   St.   140 

such  acts  because  the  agent  had  not  (1897).    See   Davis  v.   ./Etna,   etc., 

a  written  certificate  of  appointment:  Ins.  Co.,  67  N.  H.  335  (1892). 

Landes  v.  Safety,  etc.,  Ins.  Co.,  190  16  London,  etc.,  Ins.  Co.  ,v.  Gertei- 

Pa.  St.  536,  42  Atl.  961  (1899).  When  sen  (Ky.),  51  S.  W.  617  (1899).     See 

the  company  issues  a  policy  upon  an  §  160,  infra. 

application  taken  by  a  solicitor,  it  is  1T  Bell   v.   Peabody   Ins.   Co.    (W. 

estopped  to  deny  his  agency:     Lon-  Va.),  38  S.  E.  541  (1901). 


§    154  AGENCY,    WAIVER   AND   ESTOPPEL.  132 

knowledge  of  the  terms  of  employment,  such  terms  are  conclusive. 
But  the  agent  may  exceed  his  actual  authority  under  such  circum- 
stances as  will  justify  persons  dealing  with  him  without  knowledge 
of  limitations  on  his  authority  in  assuming  that  he  has  greater  author- 
ity than  is  in  fact  the  case  as  between  the  agent  and  his  principal. 
One  who  has  no  knowledge  of  limitations  may  assume  that  an  agent 
has  power  to  bind  his  principal  within  the  scope  of  his  apparent 
authority. 

Insurance  agents  are  known  by  various  designations,  such  as  gen- 
eral, special  and  soliciting,  which  in  a  rough  way  describe  the  powers 
which  are  conferred  upon  them.  Lord  Ellenborough  denned  a  gen- 
eral agency  as  one  which  arises  from  general  employment,  while 
a  special  agency  is  confined  to  and  constituted  by  the  authority  dele- 
gated in  that  particular  instance.  Judge  Story  said  that  "a  special 
agency  properly  exists  when  there  is  a  delegation  of  authority  to  do  a 
single  act,  and  a  general  agency,  where  there  is  a  delegation  to  all  acts 
connected  with  a  particular  trade,  business  or  employment.  Hence, 
a  general  agent  is  one  who  is  employed  to  transact  all  the  business  of 
his  principal  of  a  particular  kind  or  in  a  particular  place,  while  a 
special  agent  is  one  authorized  to  act  only  in  a  specific  transaction."18 
It  is  doubtful  whether  the  distinction  is  of  much  practical  value,  as  the 
relation  of  the  agent  to  third  parties  is  controlled  ordinarily  by  what 
the  person  dealing  with  the  agent  has  a  right  under  the  circumstances 
to  assume  from  the  nature  and  scope  of  the  agenf s  employment.19 
The  distinction  between  general  and  special  insurance  agents  has  been 
abolished  by  the  statutes  of  some  states.  Thus,  in  Wisconsin,  the 
agents  of  insurance  companies,  without  reference  to  attempted  limita- 
tions, have  power  to  do  almost  anything  that  their  companies  could 
do.  The  statute  gives  all  insurance  agents  general  powers;  and  it 
was  held  that  an  agent  might  make  a  valid  oral  agreement  for  imme- 
diate insurance,  notwithstanding  a  stipulation  in  the  application, 

"See    Whitehead   v.    Tuckett,    15  and    S,    though    representing    their 

East    400     (1812);     Story    Agency  principal  in  a  particular  locality,  or 

(1882),  §  17;  Swell's  Evans  Agency  within     a    limited     territory,     and 

2;  Dunlop's  Paley  Agency  (1856)  2.  therefore  called  local  agents,  were 

That  the  nature  of  the  agency  is  not  in  fact  general  agents  of  the  defend- 

affected  by  the  fact  that  it  is  re-  ant  in  the  matter  of  issuing  poli- 

stricted  to  a  particular  locality,  see  cies." 

Continental,  etc.,  Ins.  Co.  v.  Ruck-  "See  Gore  v.  Canada  L.  Assur. 

man,   127   111.    364,   11   Am.   St.   21  Co.,   119   Mich.   136,   77   N.   W.   650 

(1889),  where  the  court  said:     "W  (1898). 


133 


INSURANCE    AGENTS   AND   GENERAL   RULES    OF    AGENCY. 


155 


which  was  subsequently  signed  by  the  applicant  without  actual  knowl- 
edge of  its  contents,  that  the  insurer  should  not  be  liable  until  the 
application  and  premium  were  received  by  the  secretary.  The  court 
said :  "All  the  insurance  companies  understand  that  all  their  agents 
doing  business  in  this  state  are  general  agents,  however  restricted 
their  powers  may  be  by  the  rules  of  the  companies,  or  by  the  stipula- 
tions of  their  policies,  or  by  the  applications  for  insurance/'20 

§  155.  Various  special  agents. — A  person  who  deals  with  a  gen- 
eral agent  may  assume  that  he  has  authority  co-extensive  with  his 
apparent  authority.  But  if  the  circumstances  are  such  as  to  show 
that  the  authority  is  limited  and  special,  the  person  dealing  with  him 
is  under  obligation  to  learn  the  extent  of  such  limitations.21  There 
is  considerable  conflict  of  authority  as  to  the  powers  of  a  soliciting 
agent  who  has  actual  authority  merely  to  receive  applications  and 
forward  them  to  the  company  for  approval.  It  has  been  held  that 
such  an  agent  can  not  bind  the  company  by  an  oral  contract  of  in- 
surance,22 or  for  the  renewal  of  a  policy,23  or  for  additional  insur- 
ance,24 or  by  his  construction  of  the  policy;25  nor  can  he  consent  to 


*>Wis.  Rev.  Stat.,  §  1977;  Mathers 
v.  Union,  etc.,  Ass'n,  78  Wis.  588,  11 
L.  R.  A.  83  (1891). 

21  As  to  the  circumstances  under 
which  the  applicant  must  ascertain 
the  agent's  authority,  see  Sun  Fire 
Office  v.  Wich,  6  Colo.  App.  103,  39 
Pac.  587  (1894).  The  mere  fact 
that  a  person  is  the  representative 
of  the  insurer  for  a  certain  purpose, 
such  as  the  making  of  a  medical  ex- 
amination, does  not  justify  the  in- 
ference that  he  has  authority  to 
represent  the  company  in  other  mat- 
ters, such  as  the  filling  out  of  the 
application  for  insurance:  Flynn 
v.  Equitable  L.  Assur.  Soc.,  67  N.  Y. 
500  (1876).  The  medical  examiner 
is  the  agent  of  the  company  in  mak- 
ing the  examination,  although  the 
application  recites  that  he  shall  be 
regarded  as  the  agent  of  the  appli- 
cant: Knights  of  Pythias  v.  Cog- 
bill,  99  Tenn.  28  (1887).  The  local 


agent  of  a  life  insurance  company  is 
in  the  discharge  of  no  duty  which 
he  owes  his  company  when  he  is 
present  at  the  medical  examination 
of  an  applicant.  He  can  not  there- 
fore bind  the  company  by  his  ad- 
vice as  to  the  proper  answer  to  a 
question  as  to  whether  the  applicant 
has  ever  been  rejected  as  an  appli- 
cant for  insurance  in  other  com- 
panies: U.  S.  L.  Ins.  Co.  v.  Smith, 
92  Fed.  503,  34  C.  C.  A.  506  (1899). 

22  O'Brien  v.  New  Zealand  Ins.  Co., 
108    Cal.    227     (1895);    Fleming    v. 
Hartford   F.   Ins.   Co.,   42   Wis.   616 
(1877). 

23  Shank  v.  Glens  Falls  Ins.  Co.,  4 
N.  Y.  App.  Div.  516  (1896).     In  this 
case  the  powers  of  the  agent  were 
clearly  limited  by  the  policy. 

"Heath  v.  Springfield,  etc.,  Ins. 
Co.,  58  N.  H.  414  (1878). 

25  Dryer  v.  Security  F.  Ins.  Co.,  94 
Iowa  471  (1895). 


§    156  AGENCY,    WAIVER   AND   ESTOPPEL.  134 

the  assignment  of  the  policy,28  or  waive  a  condition  therein.27  A  mere 
collecting  agent  can  not  bind  the  company  by  an  agreement  to  waive 
any  of  the  terms  of  the  policy.28  So,  it  has  been  held  that  an  agent 
with  authority  to  adjust  a  loss  can  not  waive  a  forfeiture  of  the  pol- 
icy,29 although  he  may  waive  the  making  of  preliminary  proofs  of 
loss.80 

§  156.  Sub-agents  and  clerks. — Although  the  recent  authorities 
upon  the  power  to  delegate  authority  to  sub-agents  and  clerks  have 
been  subjected  to  some  criticism,  the  rule  is  well  established  that  the 
insurer  is  liable  not  only  for  the  acts  of  his  general  agent,  but  also 
for  the  acts  of  the  clerks  and  employes  of  such  agent  to  whom  he 
has  delegated  authority  to  discharge  his  functions  within  the  scope  of 
his  agency.31  It  was  said  in  a  recent  case32  that  "insurance  companies 
know,  or  ought  to  know,  when  they  appoint  general  agents,  that,  ac- 
cording to  the  ordinary  course  of  business,  they  have  clerks  and  other 
persons  who  assist  them,  and  that  their  agents  in  many  instances  could 
not  transact  the  business  intrusted  to  them  if  they  were  required  to 
give  their  personal  attention  to  all  its  details.  It  being  necessary, 
therefore,  and  according  to  the  usual  course  of  business,  for  their 
agents  to  employ  others  to  aid  them  in  doing  the  work,  it  is  just  and 

*  Strickland  v.  Council  Bluffs  Ins.  31  Steele   v.   German    Ins.    Co.,   93 

Co.,  66  Iowa  466  (1885).  Mich.    81,    18    L.   R.   A.    85    (1892); 

"As  to  proof  of  loss,  see  Lohnes  Swain  v.  Agricultural   Ins.   Co.,   37 

v.   Ins.  Co.,   121  Mass.  439    (1877);  Minn.  390   (1887);   Indiana  Ins.  Co. 

Bowlin    v.    Hekla    F.    Ins.    Co.,    36  v.    Hartwell,    123    Ind.    177    (1889). 

Minn.  433  (1887).  In   some  cases  it  is  said  that  the 

w  Bryan  v.  National  L.  Ins.  Ass'n,  power  of  the  p'rincipal  can  not  be 

21  R.  I.  149,  42  Atl.  513  (1899).  delegated  to  a  sub-agent  without  ac- 

"Hollis  v.  State  Ins.  Co.,  65  Iowa  tual     or     implied     authority.     See 

454  (1884).  Phoenix  Ins.   Co.  v.   Spiers,   87   Ky. 

""^Etna  Ins.  Co.  v.  Shryer,  85  Ind.  285  (1888);  Waldman  v.  North  Brit- 

362     (1882).     The    contract    of    an  ish,  etc.,  Ins.  Co.,  91  Ala.  170,  24  Am. 

agent  sent  to  adjust  a  loss  is  bind-  St.   883    (1890).     But,   as   stated   in 

ing  upon  the  company  in   the  ab-  the  cases  above  cited,  the  authority 

sence  of  notice  to  the  insured  of  any  may  easily  be  implied  from  the  cir- 

limitation    upon    the    authority    of  cumstances. 

such    adjuster:     Slater    v.    Capital  M Goode  v.  Georgia  Home  Ins.  Co., 

Ins.  Co.,  89  Iowa  628,  23  L.  R.  A.  181  92  Va.  392,  30  L.  R.  A.  842   (1895); 

(1894).     See  also  Faust  v.  American  Deitz  v.  Providence  Wash.  Ins.  Co., 

F.  Ins.  Co.,  91  Wis.  158,  30  L.  R.  A.  33  W.  Va.  526   (1890). 
783  (1895);  Dick  v.  Merchants'  Ins. 
Co.,  92  Wis.  46,  65  N.  W.  742  (1896). 


135  INSURANCE   AGENTS   AND   GENERAL    RULES    OF    AGENCY.     §    157 

reasonable  that  insurance  companies  should  be  held  responsible  not 
only  for  the  acts  of  the  agents,  but  also  for  the  acts  of  their  agents' 
employes  within  the  scope  of  the  agents'  authority.  It  is  no  suffi- 
cient answer  to  this  view  to  say  that  the  insurers  did  not  authorize 
their  agents  to  delegate  their  authority  to  others.  It  may  be  that 
they  did  not  do  so  expressly,  but  they  appointed  agents  whom  they 
knew,  or  ought  to  have  known,  would,  according  to  the  usage  or  the 
necessities  of  the  business,  engage  the  services  of  others  in  doing  the 
work  intrusted  to  them;  and,  having  this  knowledge,  they  will  be 
held  to  have  impliedly  authorized  their  agents  to  do  what  was  usual 
or  necessary  in  the  business." 

An  insurance  agent  may,  therefore,  employ  a  clerk  and  authorize 
him  to  contract  for  risks,  to  deliver  policies  and  make  renewals,  collect 
premiums  and  give  credit  therefor  by  waiving  prepayment.33  Where 
a  policy  contained  a  provision  that  "only  such  persons  as  shall  hold  a 
commission  from  this  company  shall  be  considered  as  its  agents  in 
any  transaction  relating  to  this  insurance,"  it  was  held  that  notice 
of  other  insurance  given  a  clerk  or  employe  of  a  commissioned  agent 
was  notice  to  the  company.34  So,  notice  to  a  clerk  of  the  insurer's 
agent  of  the  condition  of  the  insured's  title  is  notice  to  the  company.35 

§  157.  Insurance  brokers. — An  insurance  broker  must  be  dis- 
tinguished from  an  ordinary  agent.36  He  is  generally  the  agent  of 
the  insured,  and  may  hence  bind  him  by  his  concealments  and  rep- 
resentations made  in  the  course  of  the  negotiation.37  •  A  broker  is 

33  Bodine  v.  Exchange  F.  Ins.  Co.,  He  is  the  agent  for  the  assured,  ac- 
51  N.  Y.  117,  10  Am.  Rep.  566  (1872).  cording  to  all  the  authorities  on  the 

34  Arff  v.  Star  F.  Ins.  Co.,  125  N.  Y.  subject,  though  at  the  same  time, 
57,  10  L.  R.  A.  609  (1890).  for  some  purposes,  he  may  be  the 

35  Carpenter  v.  German- Amer.  Ins.  agent  for  the  insurer,  and  his  acts 
Co.,  135  N.  Y.  298  (1892).  and     representations     within     the 

36  Gude  v.  Exchange  F.  Ins.  Co.,  53  scope  of  his  authority  as  such  agent 
Minn.    220    (1893);    Bernheimer   v.  are     binding     upon     the     insured: 
City     of     Leadville,    14     Colo.     518  Mechem  Agency,  §  931;  Hartford  F. 
(1890).  Ins.   Co.  v.  Reynolds,  36  Mich.   502 

37  In  John  R.  Davis  L.  Co.  v.  Hart-  (1877);    Standard    Oil    Co.    v.    Tri- 
ford  F.  Ins.  Co.,  95  Wis.  226,  37  L.  umph  Ins.  Co.,  64  N.  Y.  85   (1876); 
R.  A.  131   (1897),  Mr.  Justice  Mar-  Hamblet  v.  City  Ins.  Co.,  36  Fed.  118 
shall   said:     "Leaving  out  of  view  (1888);    American    F.    Ins.    Co.    v. 
the  statute,  what  the  powers  of  an  Brooks,    83    Md.    22    (1896).     Ques- 
insurance  broker  are  can  hardly  be  tions    involving    the    scope    of    the 
a   subject   for   serious   controversy,  powers  of  an  insurance  broker  to 


§    157  AGENCY,    WAIVER   AND   ESTOPPEL.  136 

defined  as  a  person  who,  "for  compensation,  acts  or  aids  in  any  man- 
ner in  the  negotiation  of  contracts  of  insurance  or  reinsurance,  or 
placing  risks  or  effecting  insurance  or  reinsurance,  for  a  person  other 
than  himself,  and  not  being  the  appointed  agent  or  officer  of  the  com- 
pany in  which  such  insurance  or  reinsurance  is  effected/'38  It  must 
be  determined  from  the  facts  of  each  case  whether  the  broker  repre- 
sents the  insured  or  the  insurer,  or  each  for  certain  purposes.  If  he 
is  employed  by  the  insurer  he  is,  of  course,  its  agent.39  But  the  mere 
fact  that  he  solicits  the  insurance  from  the  insured,  and  receives  a 
commission  from  the  company  which  delivers  the  policy  to  the  in- 
sured, does  not  make  him  the  agent  of  the  company.40  The  broker 
may  be  the  agent  of  one  party  for  one  purpose  and  of  the  other  for 
another  purpose.  In  Indiana  he  is  said  to  be  the  agent  of  the  com- 
pany for  the  purpose  of  delivering  the  policy  and  receiving  the  pre- 
mium.41 In  Texas  he  is  its  agent  to  collect  premiums  only;42  and 
this  is  the  rule  by  statute  in  Massachusetts.43  In  Pennsylvania44  he 
is  not  the  agent  of  the  insurer  even  for  this  purpose.  A  broker  who 
is  employed  only  to  secure  a  policy  can  not,  by  virtue  of  such  employ- 
ment, represent  his  employer  in  other  matters  relating  to  the  in- 
surance. His  agency  ceases  when  the  policy  is  procured,  and  he  can 
not  thereafter  cancel  the  policy,  and  his  principal  is  not  affected  by 

represent  the  insured  arise  most  fre-  stands  in  the  place  of  the  principal, 

quently  where  notice  of  cancellation  and  the  latter  is  bound  by  whatever, 

is  served   by   the   insurer  on   such  within  such  scope,  such  agent  may 

broker  when  the  contract  of  insur-  do,  to  the  same  extent  as  if  it  was 

ance  requires  it  to  be  served  upon  done  by  the  principal." 

the  insured.     In  such  case  the  ques-  M  Mass.  Laws  1887,  ch.  214,  §  93. 

tion  turns  on  whether  the  employ-  ^  See  Newark  F.  Ins.  Co.  v.  Sam- 

ment  of  the  broker  extended  beyond  mons,  110  111.  166  (1884). 

the  mere  procurement  of  the  insur-  *°  Seamans  v.  Knapp,  89  Wis.  171, 

ance.     If   not,    it   is   held   that   his  27  L.  R.  A.  362  (1895). 

agency  ceased  upon  the  delivery  and  "•  Indiana  Ins.  Co.  v.  Hartwell,  123 

acceptance  of  the  policy,  so  that  the  Ind.  177   (1889).     To  same  effect  is 

service    of    notice    of    cancellation  Hermann  v.  Niagara  F.  Ins.  Co.,  100 

upon  him  was  ineffectual.     But  the  N.  Y.  411  (1885). 

broker  may  be  so  clothed  with  au-  "East  Texas  F.  Ins.  Co.  v.  Blum, 

thority  as  to  have  full  power  to  act  76  Tex.  653  (1890). 

for  the  insured  in  canceling,  as  well  43  See  Davis  v.  JEtna,,  etc.,  Ins.  Co., 

as  procuring  policies.     In  all  cases  67  N.  H.  335  (1892). 

the  familiar  rule  respecting  the  re-  M  Pottsville,  etc.,  Ins.  Co.  v.  Min- 

lation   of   principal   and   agent   ap-  nequa  Springs,  etc.,  Co.,  100  Pa.  St. 

plies, — that  within  the  scope  of  his  137  (1882). 

authority  to  procure  insurance  he 


137    INSURANCE  AGENTS  AND  GENEEAL  RULES  OF  AGENCY.  §  158 

notice  of  cancellation  or  of  other  matters  relating  to  the  risk.45  The 
delivery  of  the  policy  to  a  broker,  employed  by  the  insured  to  procure 
it,  is  a  delivery  to  the  insured.46  Where  a  company  issues  policies 
upon  representations  of  brokers  assuming  to  act  for  it,  and,  in  pur- 
suance of  business  methods  customary  between  them,  without  any 
communication  with  the  insured,  the  broker  will  be  held  to  be  the 
agent  of  the  insurer,  although  the  policy  provides  that  no  person,  un- 
less duly  authorized  in  writing,  shall  be  deemed  its  agent.47 

§  158.  Powers  of  agents. — An  agent  may  bind  his  principal  when 
acting  within  the  scope  of  his  authority,  and  his  power  is  determined 
not  alone  by  the  actual,  but  also  by  the  apparent  or  ostensible  author- 
ity. The  latter  is  such  as  a  principal,  intentionally  or  by  want  of 
ordinary  care,  allows  a  third  person  to  believe  the  agent  to  possess.48 
A  general  agent  can  bind  his  principal  by  any  act  within  the  ordinary 
scope  of  the  business.49  His  acts  are  the  acts  of  the  principal,  and  he 
may  hence  waive  a  condition  in  a  policy  which  his  principal  could 
waive,50  correct  a  misdescription  of  the  property  in  the  policy,81  and 
do  other  such  things,  subject  always  to  the  provision  that  his  powers 
may  legally  be  limited,  if  such  limitations  are  known  to  the  persons 
who  deal  with  him.  But  secret  instructions,  in  derogation  of  the 
ordinary  powers  which  the  public  may  properly  assume  to  be  pos- 
sessed by  such  agents,  are  ineffectual.52 

46  Hermann  v.  Niagara  F.  Ins.  Co.,         B0  Ins.  Co.  v.  Norton,  96  U.  S.  234 
100    N.    Y.    411,    53    Am.    Rep.    303      (1877).     An  agent  of  an  insurance 
(1885).  company  acting  within  the  scope  of 

"Holmes  v.  Thomason  (Tex.  Civ.  his  authority  may,  upon  notice  of  a 

App.),  61  S.  W.  504  (1901).  breach  of  condition  contained  in  a 

47  The  insured  had  no  knowledge  policy  of  insurance,  waive  the  com- 
of  the  actual  relations  between  the  pany's  right  to  take  advantage  of  a 
company  and  the  broker:     McElroy  forfeiture:     Home    F.    Ins.    Co.    v. 
v.  British  Amer.  Assur.  Co.,  94  Fed.  Kuhlman,  58  Neb.  488,  78  N.  W.  936 
990,  36  C.  C.  A.  615  (1899).  (1899).     It  is  immaterial  what  the 

48  Ins.  Co.  v.  Wilkinson,  13  Wall,  agent  is  called  so  long  as  he  is  act- 
(U.  S.)  222  (1871);  O'Brien  v.  New  ing    within    the    scope    of    his    au- 
Zealand  Ins.  Co.,  108  Cal.  227(1895);  thority. 

Viele  v.  Germania  Ins.  Co.,  26  Iowa  51  Taylor  v.  State  Ins.  Co.,  98  Iowa 

9     (1868);     California    Ins.    Co.    v.  521,  60  Am.  St.  210  (1896). 

Gracey,  15  Colo.  70,  22  Am.  St.  376  K  Hall    v.    Union,    etc.,    Ins.    Co. 

(1890).  (Wash.),  51  L.  R.  A.  288  (1900). 

48  Croft  v.  Hanover  F.  Ins.  Co.,  40 
W.  Va.  508,  52  Am.  St.  902  (1895). 


§    159  AGENCY,    WAIVER  AND   ESTOPPEL.  138 

§  159.  Restrictions  in  application  or  policy. — The  early  cases 
holding  the  insurance  companies  to  strict  responsibility  for  acts  of 
their  soliciting  agents  led  to  the  insertion  in  applications  and  pol- 
icies of  numerous  provisions  whereby  it  was  sought  to  make  the  in- 
sured bear  the  burden  of  the  agent's  misconduct.  As  a  result,  their 
policies  became  shingled  over  with  stipulations  that  were  practically 
deceptions.53  Had  full  force  and  effect  been  given  to  all  these  pro- 
visions, a  policy  of  insurance  would  have  been  simply  a  unilateral 
contract,  with  an  option  to  perform  on  the  part  of  the  company.  But 
as  the  companies  became  astute  in  contriving  such  provisions,  courts 
were  careful  to  see  that  they  were  not  used  as  the  instruments  of 
fraud  and  injustice.  Out  of  this  condition  there  grew  a  mass  of 
hopelessly  conflicting  decisions  which  can  not  be  reconciled  on  any 
theory  other  than  the  desire  of  the  courts  to  do  justice  in  the  par- 
ticular case.  In  many  states  this  has  been  remedied  by  the  enact- 
ment of  statutes  declaring  the  powers  and  duties  of  agents  of  insur- 
ance companies  and  prescribing  the  form  of  policy  which  must  be 
used.  Where  these  statutes  exist,  they  are,  of  course,  controlling. 

The  effectiveness  of  such  restrictive  provisions  depends  largely 
upon  whether  the  applicant  for  insurance  has  knowledge  of  their  ex- 
istence. Where  the  limitation  is  inserted  in  the  application,  which 
is  signed  by  the  applicant,  he  is  generally  held  bound  by  notice  of  its 
existence,54  although  in  some  cases  this  is  held  not  conclusive.65 

Such  limitations  may  be  ineffectual  in  the  particular  case  because 
not  regarded  as  notice  to  the  applicant,  or  because  waived  by  the  com- 
pany or  its  authorized  agent,  or  because  by  its  conduct  the  company 
has  estopped  itself  from  asserting  the  defense.  In  considering  the 
power  of  an  agent  it  is  necessary  to  bear  in  mind  the  distinction  be- 
tween acts  which  are  connected  with  the  procuring  of  the  insurance 
and  those  which  relate  to  the  modification  or  waiver  of  conditions  in 
the  policy  which  relate  to  the  future. 

Where  the  policy  contained  a  provision  that  the  company  "shall  not 
be  bound  *  *  *  by  any  act  or  statement  made  *  *  *  by 
any  agent  *  *  which  is  not  authorized  by  this  policy  or  con- 

63  See  the  tirade  against  insurance  World,  etc.,  Ins.  Co.,  41  Conn.  168, 

companies  by  Chief  Justice  Doe  of  16  Am.  Rep.  490  (1874). 

New  Hampshire  in  DeLancey  v.  Ins.  M  See  State   Ins.   Co.  v.   Gray,   44 

Co.,  52  N.  H.  581  (1873).  Kan.  731  (1890);  Tubbs  v.  Dwelling- 

84  New  York  L.  Ins.  Co.  v.  Fletch-  House  Ins.  Co.,  84  Mich.  646  (1891). 
er,  117  U.  S.  531  (1886);  Ryan  v. 


139  INSURANCE    AGENTS    AND   GENERAL    RULES    OF   AGENCY.     §    160 

tained  therein,  or  in  any  written  paper  mentioned  herein/'  the  power 
can  only  be  exercised  in  the  mode  prescribed,  "unless  it  is  shown  that 
the  agent  possessed  actually  or  apparently  the  power  of  his  principal 
in  respect  to  the  provisions  alleged  to  have  been  waived."66  In  line 
with  this  it  was  said  in  a  case  where  it  was  claimed  that  the  agent 
had  waived  a  provision  requiring  prompt  payment  of  a  premium  note, 
that  "the  written  agreement  of  the  parties,  as  embodied  in  the  policy 
and  the  indorsement  thereon,  as  well  as  the  notes  and  the  receipts 
given  therefor,  was  undoubtedly  to  the  express  purport  that  a  failure 
to  pay  the  note  at  maturity  would  incur  a  forfeiture  of  the  policy.  It 
also  contained  an  express  declaration  that  the  agents  of  the  company 
were  not  authorized  to  make,  alter  or  abrogate  contracts  or  waive 
forfeitures'.  And  these  terms,  had  the  company  so  chosen,  it  could 
have  insisted  on.  But  a  party  always  has  the  option  to  waive  a  con- 
dition or  stipulation  made  in  his  own  favor.  The  company  was  not 
bound  to  insist  upon  a  forfeiture,  though  incurred,  but  might  waive 
it.  It  was  not  bound  to  act  upon  the  declaration  that  its  agent  had 
not  power  to  make  agreements  or  waive  forfeitures,  but  might  at  any 
time  give  them  such  power.  The  declaration  was  only  tantamount  to 
a  notice  to  the  assured,  which  the  company  could  waive  and  disregard 
at  pleasure.  In  either  case,  both  with  regard  to  the  forfeiture  and  the 
powers  of  its  agent,  a  waiver  of  the  stipulation  or  notice  would  not 
be  repugnant  to  the  written  agreement,  because  it  would  only  be  the 
exercise  of  an  option  which  the  agreement  left  in  it.  And  whether 
it  did  exercise  such  option  or  not  was  a  fact  provable  by  parol  evi- 
dence as  well  as  by  writing,  for  the  obvious  reason  that  it  could  be 
done  without  writing."37 

§  160.  Limitations  on  authority  of  agent. — As  between  the  prin- 
cipal and  the  agent,  the  authority  of  the  agent  may  be  limited  in 
any  manner  thought  desirable  by  the  principal,  and  such  limitations 
will  be  given  full  force  and  effect  as  against  all  persons  who  have 
knowledge  of  their  existence.  But  undisclosed  instructions  which 
are  contrary  to  the  natural,  ordinary  and  ostensible  powers  possessed 
by  such  agent  are  not  binding  upon  those  who  have  neither  actual  nor 
constructive  notice  of  their  existence.  It  is  generally  held  that  the 

08  Messelback  v.  Norman,  122  N.  Y.  B7  Insurance  Co.  v.  Norton,  96  U.  S. 
578  (1890).  234  (1877). 


160a 


AGENCY,    WAIVER   AND   ESTOPPEL. 


140 


insured  will  be  deemed  to  have  notice  of  limitations  which  are  con- 
tained in  the  application  which  he  signs.57* 

§  160a.  Limitations  on  authority — Continued. — Some  courts  re- 
fuse to  give  effect  to  a  provision  in  the  policy  limiting  the  power  of 
the  company's  agent,58  while  others  treat  it  as  a  stipulation  by  which 
the  assured,  by  accepting  the  policy,  agrees  to  be  bound.59  In  Wis- 
consin it  was  said60  that  "when  the  assured  has  accepted  a  policy  con- 
taining a  clause  prohibiting  the  waiver  of  any  of  its  provisions  by  the 
local  agent  he  is  bound  by  such  inhibition,  and  that  any  subsequently 
attempted  waiver  merely  by  virtue  of  such  agency  is  a  nullity.  This 
proposition  seems  to  be  supported  by  the  weight  as  well  as  the  logic 
of  the  adjudicated  cases."  Provisions  in  a  policy  which  restrict  the 
future  power  of  the  agent  by  prescribing  the  manner  in  which  he  can 
act  are  generally  sustained.61  The  tendency  is  to  hold  that  such 


BTa  New  York  L.  Ins.  Co.  v.  Fletch- 
er, 117  U.  S.  531  (1886),  and  cases 
cited;  Ruggles  v.  American  Cent. 
Ins.  Co.,  114  N.  Y.  415  (1889);  Hall 
v.  Union,  etc.,  Ins.  Co.  (Wash.),  51 
L.  R.  A.  288  (1900). 

68  The  local  agent  of  an  insurance 
company,  who  is  authorized  to  make 
contracts  of  insurance,  issue  poli- 
cies, and  receive  premiums  there- 
for, and  is  clothed  with  all  the  au- 
thority of  his  principal  with  respect 
thereto,  may  waive  a  forfeiture  of  a 
policy  under  a  provision  that  it 
shall  be  void  if  foreclosure  proceed- 
ings are  commenced,  notwithstand- 
ing that  the  policy  provides  that  the 
agent  who  issues  the  policy  shall 
not  have  power  to  waive,  modify,  or 
revive  the  same:  Springfield,  etc., 
Co.  v.  Traders'  Ins.  Co.,  151  Mo.  90, 
52  S.  W.  238  (1899). 

58  Enos  v.  Sun  Ins.  Co.,  67  Cal.  621 
(1885);  Cleaver  v.  Traders'  Ins.  Co., 
65  Mich.  527,  32  N.  W.  660  (1887); 
Burlington  Ins.  Co.  v.  Gibbons,  43 
Kan.  15,  22  Pac.  1010  (1890);  Wei- 
dert  v.  State  Ins.  Co.,  19  Ore.  261,  24 
Pac.  242  (1890);  Greene  v.  Lycom- 


ing  F.  Ins.  Co.,  91  Pa.  St.  387  (1879) ; 
Greenwood  v.  New  York  L.  Ins.  Co., 
27  Mo.  App.  401  (1887);  Equitable 
Ins.  Co.  v.  Cooper,  60  111.  509  (1871); 
Zimmerman  v.  Hpme  Ins.  Co.,  77 
Iowa  685,  42  N.  W.  462  (1889); 
Clevenger  v.  Mutual  L.  Ins.  Co.,  2 
Dak.  114  (1878);  Walsh  v.  Hartford 
F.  Ins.  Co.,  73  N.  Y.  5  (1878).  An 
agent  of  an  insurance  company  who 
is  only  authorized  to  solicit  and 
take  applications  for  insurance,  re- 
ceive the  premiums,  and  deliver  the 
policies,  which  have  been  signed  by 
the  proper  officers,  has  no  authority, 
either  express  or  implied,  to 
waive  a  breach  of  the  stipulation  in 
the  policy  that  subsequent  addition- 
al insurance  shall  not  be  effected  on 
the  property  without  the  consent  of 
the  underwriter:  Alabama,  etc., 
Assur.  Co.  v.  Long,  etc.,  Co.  (Ala.), 
26  So.  655  (1899). 

60  Hankins  v.  Rockf ord  Ins.  Co.,  70 
Wis.  1,  35  N.  W.  34  (1878),  citing 
many  cases. 

eiKyte  v.  Commercial  U.  Assur. 
Co.,  144  Mass.  43  (1887);  Behler  v. 
German,  etc.,  Ins.  Co.,  68  Ind.  347 


141     INSURANCE  AGENTS  AND  GENERAL  RULES  OF  AGENCY.  §  160a 

provisions  are  binding  on  the  assured  only  in  respect  to  such  matters 
as  occur  after  the  delivery  of  the  policy.  In  a  leading  case  Mr.  Jus- 
tice Mitchell  forcibly  said:62  "It  would  be  a  stretch  of  legal  prin- 
ciples to  hold  that  a  person  dealing  with  an  agent,  apparently  clothed 
with  authority  to  act  for  his  principal  in  the  matter  in  hand,  could 
be  affected  by  notice,  given  after  the  negotiations  were  completed, 
that  the  party  with  whom  he  had  dealt  should  be  deemed  transformed 
from  the  agent  of  one  party  into  the  agent  of  the  other.  To  be  effica- 
cious, such  notice  should  be  given  before  the  negotiations  are  com- 
pleted. The  application  precedes  the  policy,  and  the  insured  can  not 
be  presumed  to  know  that  any  such  provision  will  be  inserted  in  the 
latter.  To  hold  that  by  a  stipulation  unknown  to  the  insured  at  the 
time  he  made  the  application,  and  when  he  relied  upon  the  fact  that 
the  agent  was  acting  for  the  company,  he  could  be  held  responsible 
for  the  mistakes  of  such  agent  would  be  to  impose  burdens  upon  the 
insured  which  he  never  anticipated.  Hence  we  think  that  if  the  agent 
was  the  agent  of  the  company  in  the  matter  of  making  out  and  re- 
ceiving the  application,  he  can  not  be  converted  into  the  agent  of  the 
insured  by  merely  calling  him  such  in  the  policy  subsequently  issued ; 
neither  can  any  mere  form  of  words  wipe  out  the  fact  that  the  insured 
truthfully  informed  the  insurer  through  its  agent  of  all  matters  per- 
taining to  the  application  at  the  time  it  was  made.  We  are  aware 
that  in  so  holding  we  are  placing  ourselves  in  conflict  with  the  views 

(1879);  Wilkins  v.  State  Ins.  Co.,  43  clause  in  a  policy  withholding  from 
Minn.  177  (1890);  O'Brien  v.  Pres-  agents  authority  "to  make,  alter  or 
cott  Ins.  Co.,  134  N.  Y.  28,  31  N.  E.  discharge  this  or  any  other  contract 
265  (1892);  Hartford  F.  Ins.  Co.  v.  in  relation  to  the  matter  of  this  in- 
Small,  66  Fed.  490,  14  C.  C.  A.  33  surance"  has  no  relation  to  the  ap- 
(1895);  Gould  v.  Dwelling-House  plication  which  precedes  the  policy. 
Ins.  Co.,  90  Mich.  302,  51  N.  W.  455  "This  provision  of  the  policy  does 
(1892);  Marvin  v.  Universal  L.  Ins.  not  take  effect  until  the  application 
Co.,  85  N.  Y.  278  (1881);  Smith  v.  is  made  and  accepted  and  the  policy 
Niagara  F.  Ins.  Co.,  60  Vt.  682,  1  L.  is  issued.  Its  relation  to  the  policy 
R.  A.  216  (1888);  Knudson  v.  Hekla  and  other  completed  contracts  con- 
F.  Ins.  Co.,  75  Wis.  198,  43  N.  W.  cerning  the  insurance  has  no  refer- 
954  (1889);  Quinlan  v.  Providence  ence  to  the  application  which  pre- 
Wash.  Ins.  Co.,  133  N.  Y.  356,  31  N.  cedes  the  policy,  and  which,  until  it 
B.  31  (1892).  is  accepted  and  the  policy  issued,  is 
MKausal  v.  Minnesota,,  etc.,  Ins.  a  mere  offer  or  proposition  for  a 
Ass'n,  31  Minn.  17,  47  Am.  Rep.  776  contract  of  insurance:"  Mutual, 
(1883).  See  also  Boetcher  v.  Hawk-  etc.,  Ins.  Co.  v.  Robison,  58  Fed.  723, 
eye  Ins.  Co.,  47  Iowa  253  (1877).  A  22  L.  R.  A.  325,  7  C.  C.  A.  444  (1893). 


§    161  AGENCY,,    WAIVER   AND   ESTOPPEL.  142 

of  some  eminent  courts.  But  the  conclusion  we  have  reached  is  not 
without  authority  to  sustain  it,  and  is,  as  we  believe,  sound  in  prin- 
ciple and  in  accordance  with  public  policy." 

§  161.  Limitations  contained  in  application — Constructive  no- 
tice.— While  the  courts  should  not  give  effect  to  a  provision  in  the  ap- 
plication which  attempts  to  limit  the  authority  of  the  agent,  when  it 
appears  that  the  applicant  was  in  any  way  misled,  there  seems  to  be 
no  good  reason  why  the  company  should  not  be  permitted  to  prohibit 
its'  agent  from  acting  as  the  amanuensis  of  the  applicant.  When 
there  is  no  statute  regulating  the  matter,  and  the  applicant  has  knowl- 
edge of  the  limitations,  he  is  bound  thereby.  A  person  who  signs  a 
written  statement  should  know  its  contents  or  be  able  to  give  an  ex- 
cuse for  his  ignorance  other  than  his  own  negligence.  The  applica- 
tion signed  by  the  applicant  is  ordinarily,  and  often  by  statute  re- 
quired to  be,  attached  to  the  policy,63  and  thus  is  delivered  to  the  in- 
sured, who  has  an  opportunity  to  become  acquainted  with  its  con- 
tents. If  the  statements  in  the  application  are  incorrect,  he  should 
make  the  fact  known  to  the  company  within  a  reasonable  time,  or  be 
estopped  from  thereafter  asserting  it.64  But  some  courts  do  not  hold 
the  applicant  bound  to  know  the  contents  of  the  application  and  policy. 
In  Pennsylvania  it  was  said65  that  the  law  does  not,  in  anticipation  of 
a  fraud  upon  the  part  of  the  company,  impose  upon  the  assured  an 
absolute  duty  to  read  its  policy  when  he  receives  it,  although  it  was 
suggested  that  it  would  certainly  have  been  an  act  of  prudence  on  his 
part  to  do  so.  Notwithstanding  this,  "one  thing  is  certain,  however — 
the  company  can  not  repudiate  the  fraud  of  its  agent  and  thus  escape 
the  obligations  of  a  contract  consummated  thereby,  merely  because  the 
insured  accepted  in  good  faith  the  act  of  the  agent  without  examina- 
tion." The  supreme  court  of  the  United  States  recognizes  the  doc- 
trine that  when  an  insurance  agent  who  is  not  limited  in  his  authority, 
or  when  such  limitation  is  not  known  to  the  insured,  undertakes  to 
prepare  an  application  and  writes  the  answers  for  the  applicant,  he 
is  acting  for  the  company.  But  when  such  limitation  is  embodied  in 

43  As  by  Mass.  Laws  1894,  ch.  120;  M  Ryan  v.  World,  etc.,  Ins.  Co.,  41 

Iowa  Code,  §§  1741,  1819,  1826.     In  Conn.  168  (1874);  Reynolds  v.  Atlas 

Michigan  a  copy  of  the  application  Ace.  Ins.  Co.,  69  Minn.  93,  71  N.  W. 

must  be  attached  to  the  policy  when  831  (1897). 

requested  by  insured:     Laws  1899,  65  Kister  v.  Lebanon,  etc.,  Ins.  Co., 

ch.  87.  128  Pa.  St.  553,  5  L.  R.  A.  646  (1889). 


143     INSURANCE  AGENTS  AND  GENERAL  RULES  OF  AGENCY.   §  162 

the  application,  which  is  signed  by  the  insured,  he  must  be  presumed 
to  have  read  it,  and  is  therefore  bound  by  its  contents.66 

When  the  application  is  prepared  by  a  general  agent  having  no 
superior  in  the  state,  the  question  of  limitations  upon  the  agent's 
authority  does  not  arise;  and  the  company  is  bound  by  all  answers 
written  by  the  agent,  although  the  application  is  attached  to  the 
policy  and  delivered  to  the  insured.67 

§  162.  Preparation  of  application. — An  agent  who  is  authorized 
to  receive  applications  for  insurance  represents  the  insurance  com- 
pany in  all  he  does  in  connection  with  the  preparation  of  the  applica- 
tion, and  if  he  receives  truthful  information  from  the  insured,  and 
undertakes  to  fill  out  the  application  and  inserts  false  or  incorrect 
answers,  his  act  is  that  of  the  company  and  not  of  the  applicant.  This 
rule  is  established  by  statute  in  many  states,  and  is  generally  adopted 
even  where  no  statutes  are  in  existence.68 

§  163.  Provisions  restricting  power  of  officers  and  general 
agents. — A  company  can  not,  by  a  provision  in  its  policy,  restrict  its 
power  to  act  through  its  officers  or  general  agents.  Thus,  a  pro- 
vision that  the  terms  of  the  policy  can  not  be  waived  or  changed  by 
any  "officer  or  agent  of  the  company"  except  in  writing  is  invalid  in 
so  far  as  it  attempts  to  restrict  the  power  of  the  company  as  well  as 
its  agent.69  This  principle  applies  to  a  general  agent  as  well  as  an 

66  New  York  L.  Ins.  Co.  v.  Fletch-  nesota,  etc.,  Ins.  Ass'n,  31  Minn.  17, 
er,  117  U.  S.  519    (1886);    Maier  v.  47  Am.  Rep.  776,  and  note,  20  L.  R. 
Fidelity,  etc.,  Ass'n,  47  U.  S.  App.  A.   277    (1883);    Messelback  v.  Nor- 
322  (1897),  per  Harlan,  J.    See  Fire-  man,    122    N.    Y.    578    (1890).      "In 
man's  Fund  Ins.  Co.  v.  Norwood,  69  writing  the  application,  and  in  ex- 
Fed.  71, 16  C.  C.  A.  136  (1895).    That  plaining  the  interrogatories  and  the 
the  insured  may,  under  certain  cir-  meaning  of  the  terms  used,  he  is  to 
cumstances,  be  excused  from  read-  be  regarded  as  the  agent  of  the  com- 
ing   the    policy, — see    McMaster    v.  pany:"     Ryan   v.   World,   etc.,    Ins. 
New  York  L.   Ins.  Co.    (U.   S.),   22  Co.,  41  Conn.  168   (1874).     But  the 
Sup.  Ct.  10  (1901).  court    refused    to    go    further    and 

67  Michigan,  etc.,  Ins.  Co.  v.  Leon,  hold   the   company    responsible    for 
138  Ind.  636,  37  N.  B.  584  (1894).  false    statements    written    by    the 

88  Bartholomew  v.  Merchants'  Ins.  agent,  as  such  authority  could  not 

Co..  25   Iowa  507,   96   Am.   Dec.   68  by  any   possibility   have   been   con- 

(1868),  per  Dillon,  C.  J.;  Ins.  Co.  v.  templated  as  within  the  scope  of  the 

Wilkinson,    13    Wall.     (U.    S.)    222  agency.     But  see  Allen  v.  German- 

(1871);  Ins.  Co.  v.  Mahone,  21  Wall.  Amer.  Ins.  Co.,  123  N.  Y.  6  (1890). 
(U.  S.)  152   (1874);  Kausal  v.  Min-        60  Lamberton    v.     Connecticut    F. 


§    164  AGENCY,    WAIVER   AND   ESTOPPEL.  144 

officer  of  the  corporation;  as  whatever  the  company  can  lawfully  do 
can  be  done  by  its  duly  authorized  agent.  Where  a  policy  provided 
that  its  provisions  could  not  be  waived  by  the  president  and  secretary, 
the  court  said:70  "This  provision  may  be  modified  by  the  company 
to  the  same  extent  as  any  other,  and  whatever  the  company  can  do 
can  be  done  by  the  general  agent."  In  Wisconsin  it  was  said:71 
"We  must  hold,  however,  that  such  attempted  restrictions  upon  the 
power  of  the  company  or  its  general  officers  or  agents,  acting  without 
the  scope  of  their  general  authority,  to  subsequently  modify  the  con- 
tract and  bind  the  company  in  a  manner  contrary  to  such  previous 
conditions  in  the  policy,  are  ineffectual."  So,  in  New  York  it  is 
said:72  "Notwithstanding  the  provisions  of  the  policy,  that  any- 
thing less  than  a  specific  agreement  clearly  expressed  and  indorsed  on 
the  policy  should  not  be  considered  as  a  waiver  of  any  printed  or 
written  conditions  therein,  the  court  recognized  and  affirmed  the  law, 
as  settled  in  this  state,  that  such  condition  can  be  dispensed  with  by 
the  company  or  its  general  agent  by  oral  consent  as  well  as  by  writ- 
ing." 

§  164.  Notice. — The  doctrine  by  which  a  principal  is  charged  with 
knowledge  of  facts  of  which  his  agent  has  notice  is  thus  stated  by 
Mr.  Justice  Story:78  "Notice  of  facts  to  an  agent  is  constructive 
notice  thereof  to  the  principal  himself  when  it  arises  from  or  is 
connected  with  the  subject-matter  of  his  agency;  for,  upon  general 
principles  of  public  policy,  it  is  presumed  that  the  agent  has  com- 
municated such  facts  to  his  principal,  and  if  he  has  not,  still,  the  prin- 
cipal having  intrusted  the  agent  with  the  particular  business,  the 
other  party  has  the  right  to  deem  his  acts  and  knowledge  obligatory 
upon  the  principal;  otherwise  the  neglect  of  the  agent,  whether  de- 
signed or  undesigned,  might  operate  most  injuriously  to  the  rights 
and  interests  of  such  party." 

Ins.  Co.,  39  Minn.  129  (1888);  Ruth-  "Story  Agency,  §  140.  See  also 

ven  v.  American  F.  Ins.  Co.,  92  Iowa  Eagle  Fire  Co.  v.  Globe,  etc.,  Co.,  44 

316,  60  N.  W.  663  (1894).  Neb.  380,  62  N.  W.  895  (1895);  Gans 

70  German  Ins.  Co.  v.  Gray,  43  v.  St.  Paul,  etc.,  Ins.  Co.,  43  Wis. 

Kan.  497,  8  L.  R.  A.  70  (1890).  108  (1877);  Forward  v.  Continental 

"Renier  v.  Dwelling-House  Ins.  Ins.  Co.,  142  N.  Y.  382  (1894); 

Co.,  74  Wis.  89  (1889),  and  cases  Phenix  Ins.  Co.  v.  Stocks,  149  111. 

therein  cited.  319  (1894);  Mesterman  v.  Home., 

"Weed  v.  London,  etc.,  Ins.  Co.,  etc.,  Ins.  Co.,  5  Wash.  524,  34  Am. 

116  N.  Y.  117  (1889).  St.  877  (1893). 


145          INSURANCE   AGENTS   AND   GENERAL   RULES   OF    AGENCY.      §    164 

In  some  states  the  statute  provides  that  where  a  company  issues 
a  policy  "upon  an  application  prepared  by  a  third  person,  assuming 
to  act  as  its  agent  or  otherwise,  it  shall  be  charged  with  his  knowledge 
of  facts  relating  to  the  property  insured,  as  they  were  stated  in  the 
application."74  Hence,  where  a  policy  is  issued  by  an  agent  who  has 
knowledge  of  other  insurance  on  the  property,  his  knowledge  is  the 
knowledge  of  the  company,  and  it  is  estopped  to  assert  that  consent 
to  the  concurrent  insurance  was  not  given  in  writing.75  So,  where 
true  information  is  given  to  the  agent  with  reference  to  matters  in- 
quired about,  his  knowledge  is  the  knowledge  of  the  company,  and  it 
is  immaterial  that  the  agent  did  not  correctly  write  the  answers.76 
So,  the  knowledge  of  the  agent  that  the  applicant  for  life  insurance 
has  made  a  false  statement,77  or  that  he  is  intemperate,  or  has  some 
disease,  has  been  held  to  be  the  knowledge  of  the  company  and  made 
the  basis  of  waiver  or  estoppel.78  Generally,  where  there  is  no  written 
application  containing  representations  and  warranties,  the  company 
is  charged  with  a  knowledge  of  the  risk  obtained  by  its  agent  through 
his  own  inquiries  and  investigations.79 

A  company  which  gives  to  an  agent  the  supervision  and  inspection 
of  its  risks  is  charged  with  knowledge  of  all  the  facts  with  reference 
to  the  risk  learned  by  the  agent  while  engaged  in  the  performance  of 
his  duties.80  But  a  person  who  is  employed  to  procure  insurance  upon 
certain  property,  and  who  applies  to  the  general  agents  of  several  com- 
panies for  policies,  and,  after  receiving  them,  collects  the  premiums 
and  pays  the  general  agents  the  amounts  claimed  by  them,  is  not  the 
agent  of  the  insurers,  so  as  to  charge  them  with  his  knowledge  as  to 
the  existence  of  other  policies.81  So,  an  insurance  company,  by  mak- 
ing a  person  its  agent  to  deliver  a  policy,  does  not  become  chargeable 
with  knowledge  obtained  by  him  while  acting  as  agent  of  the  insured 

74  See  New  Hampshire  Laws  1885,  7T  McGurk  v.  Metropolitan  L.  Ins. 
ch.  170.  Co.,  56  Conn.  528,  16  Atl.  263  (1888). 

75  Phenix  Ins.  Co.  v.  Covey,  41  Neb.  78  Newman  .v.  Covenant,  etc.,  Ins. 
724,  60  N.  W.  12    (1894);    Home  F.  Ass'n,    76    Iowa    56,    40    N.    W.    87 
Ins.  Co.  v.  Hammang,  44  Neb.  566,  (1888). 

62  N.  W.  883    (1895),  citing  many  "Cumberland  Valley,  etc.,  Co.  v. 

cases.  Schell,  29  Pa.  St.  31  (1857). 

78  Ins.  Co.  v.  Wilkinson,  13  Wall.  "°  Phenix  Ins.  Co.  v.  Holcombe,  57 

(U.  S.)  232   (1871);   Mutual  Ben.  L.  Neb.  622,  78  N.  W.  300  (1899). 

Ins.  Co.  v.  Robison,  58  Fed.  723,  7  "United    Firemen's    Ins.    Co.    v. 

C.  C.  A.  444  (1893).  Thomas,  92  Fed.  127,  34  C.  C.  A.  240 

(1899). 
10 — ELLIOTT  INS. 


§    165  AGENCY,    WAIVER   AND   ESTOPPEL.  146 

in  procuring  the  insurance.82  The  general  rule  is  that  the  principal 
is  not  chargeable  with  notice  of  facts  learned  by  the  agent  in  the 
course  of  an  .employment  in  no  way  connected  with  the  agency.83  But 
there  are  cases  which  do  not  admit  this  limitation  ;84  and  others  hold 
the  principal  bound  by  knowledge  acquired  by  the  agent  in  another 
business,  acquired  at  such  a  time  with  reference  to  the  issuance  of 
the  policy  as  to  justify  the  assumption  that  he  had  it  in  mind  when 
the  policy  was  issued.85 

§  165.  Notice  of  loss  to  local  agent. — The  local  agent  of  a  fire 
insurance  company  had  actual  authority  to  accept  applications  for 
'insurance,  fix  the  premium  or  rate  of  insurance,  and  fill  up,  counter- 
sign and  issue  policies  thereon,  which  he  received  from  the  company, 
already  signed  by  its  president  and  secretary.  This  was  the  extent 
of  the  agent's  actual  authority,  and  there  was  no  evidence  tending  to 
show  that  his  apparent  authority  was  other  or  greater  than  his  actual 
authority.  The  policy  required  written  notice  of  loss  to  be  given  to 
the  company.  It  was  held  that  the  agent  had  no  authority  to  receive 
or  waive  notice  of  loss,  and,  hence,  notice  to  him  was  not  notice  to 
the  company.86 

§  166.  Eights  and  liabilities  of  agent. — As  between  the  principal 
and  agent,  their  rights  and  liabilities  are  determined  by  the  express 
or  implied  provisions  of  the  contract  of  employment.  The  agent  is 
entitled  to  his  compensation  for  services  performed,  and  the  com- 
pany can  not  refuse  to  pay  his  commissions  on  the  ground  that  it  had 

82  United    Firemen's    Ins.    Co.    v.  present  in  his  mind,  issued  the  pol- 
Thomas,  92  Fed.  127  (1899).  icy  or  did  some  act  in  the  course  of 

83  St.   Paul,  etc.,   Ins.  Co.  v.   Par-  his  duties  as  agent  recognizing  the 
sons,  47  Minn.  352  (1891).  continuing  validity  of  the  policy:" 

84  See  Hartford  F.  Ins.  Co.  v.  Haas,  Phoenix   Ins.    Co.   v.   Flemming,    65 
87  Ky.  531,  2  L.  R.  A.  64  (1888).  Ark.  54,  39  L.  R.  A.  789  (1898). 

85  Stennett  v.  Pennsylvania  F.  Ins.  ^  Ermentrout  v.  Girard,  etc.,  Ins. 
Co.,     68     Iowa     674     (1886).     "The  Co.,  63  Minn.  305,  30  L.  R.  A.  346 
knowledge  of  the  fire-works  shown  (1895),   citing   Lohnes   v.    Ins.   Co., 
here  was  acquired  by  the  agent,  not  121    Mass.    439     (1877);     Smith    v. 
while  acting  for  the  company  or  for  Niagara    F.    Ins.    Co.,    60    Vt.    682 
his  firm,  but  casually  while  attend-  (1888);  Bush  v.  Westchester  F.  Ins. 
ing  to   his   own   affairs.     To   make  Co.,  63  N.  Y.  531  (1876).     See  Ruth- 
this  knowledge  affect  the  company  ven  v.  American  F.  Ins.  Co.,  92  Iowa 
it  must   be   shown   that,  the   agent  316,    60    N.    W.    663     (1894).     See 
afterwards,    with   this    information  §  188,  infra. 


147          INSURANCE   AGENTS   AND   GENERAL   RULES    OF   AGENCY.     §    166 

decided  to  change  its  rates  and  charge  a  higher  rate  after  the  serv- 
ices were  performed.  An  agent  procured  applications  for  insur- 
ance in  accordance  with  his  instructions  and  the  rules  and  regula- 
tions of  the  company,  and  forwarded  them  to  the  home  office  of  the 
defendant  for  its  action  upon  them.  The  applications  were  in  due 
form,  and  the  court  said  that  it  is  to  be  presumed  that  the  applicants 
were  insurable  risks,  and  that  the  risks  were  satisfactory  to  the  com- 
pany. No  objection  to  them  was  pointed  out,  and  the  presumption 
is  that  none  existed.  The  only  objection  made  to  delivering  the 
policies  was  that  the  rate  of  premium  on  them  was  too  low.  It  was 
held  that  while  an  agent  is  not  usually  entitled  to  his  commissions 
until  the  transaction  is  complete,  yet,  if  he  has  faithfully  performed 
his  part  of  the  transaction,  and  from  no  fault  of  his  own,  but  by  the  re- 
fusal of  the  principal  to  complete  the  contract,  it  is  not  consummated, 
he  is  entitled  to  his  commissions.87 

The  agent  is  responsible  to  the  company  for  damages  caused  by  his 
neglect  to  cancel  a  policy  within  a  reasonable  time  after  being  in- 
structed to  do  so,88  or  by  accepting  a  risk  and  issuing  a  policy  contrary 
to  instructions,89  or  by  wrongfully  and  without  authority  canceling  a 
policy.90 

Acceptance  of  a  premium  by  an  insurance  company  is  not  a  ratifica- 
tion, as  between  it  and  its  agent,  of  the  latter's  unauthorized  issuance 
of  a  policy,  since,  the  policy  being  binding  on  the  company,  the  pre- 
mium became  its  property,  as  an  incident  to  the  policy,  and  did  not 
prevent  its  seeking  recourse  over  against  its  agent;  and  this  though 
the  agent  had  first  deducted  his  commission  from  the  premium.91 

87  Currier  v.   Mutual,   etc.,   Ass'n,        8"  Hanover  F.  Ins.  Co.  v.  Ames,  39 
108    Fed.    737    (1901).    As    to    the    Minn.  150  (1888). 

agent's  right  to  damages  for  breach  "American,  etc.,  Ins.  Co.  v.  An- 

of  contract,  see  Pellet  v.  Manufac-  derson,  130  N.  Y.  134  (1891).    As  to 

turers',  etc.,  Ins.  Co.,  104  Fed.  502,  the  liability  of  sureties  on  agent's 

43  C.  C.  A.  669  (1900).  bond,  see  Royal  Ins.  Co.  v.  Clark,  61 

88  Phoenix    Ins.    Co.    v.    Pratt,    36  Minn.  476  (1895). 

Minn.  409  (1887);  Franklin  Ins.  Co.  91  Mechanics',  etc.,  Ins.  Co.  v.  Rion, 
v.  Sears,  21  Fed.  290  (1884).  (Tenn.  Ch.),  62  S.  W.  44  (1901). 


CHAPTER  IX. 

THE   RULES   OF   WAIVER  AND   ESTOPPEL   AS   APPLIED   TO    CONTRACTS   OF 

INSURANCE. 


SEC. 

175.  In  general. 

176.  Definition. 

177.  Knowledge  and  intent. 

178.  Basis  of  waiver. 

179.  Effect  of  mere  silence. 

180.  What  may  be  waived. 

181.  Waiver  of  certain  defenses. 

182.  Power  of  agent  to  waive. 

183.  Waiver  by  agent — Continued. 

184.  Prepayment  of  premium. 


SEC. 

18o.  Waiver  in  writing  only. 

186.  Limitations  in  policy — Prepay- 

ment of  premium. 

187.  Estoppel  by  act  of  agent. 

188.  Facts  known  to  company  when 

policy  issued. 

189.  Oral  testimony  to  show  actual 

statements. 

190.  Bad    faith — Collusion    between 

applicant  and  agent. 


§  175.  In  general.  —  The  doctrines  of  waiver  and  estoppel  are  so 
commingled  in  the  cases  that  the  underlying  distinctions  are  fre- 
quently disregarded.  Waiver  implies  an  intent  not  to  assert  a  known 
right  by  one  who  has  full  knowledge  of  the  circumstances.  It  is  the 
result  of  a  mental  conclusion  arrived  at  by  the  party,  while  an  estop- 
pel is  a  conclusion  drawn  by  the  law  from  something  said  or  done  by 
a  party  upon  which  another  has  relied  to  his  prejudice.  Estoppel  may 
thus  exist  where  there  is  no  technical  waiver.  It  is  often  said  that  a 
party  has  waived  certain  rights,  and,  therefore,  is  estopped  from  there- 
after asserting  them.1 

§  176.  Definition.  —  A  waiver  is  the  voluntary  relinquishment  of  a 
known  right.  It  may  be  by  express  language  or  by  acts  from  which 
an  intention  to  waive  may  be  inferred  or  from  which  a  waiver  follows 
as  a  legal  result.2 


v.     Massachusetts,     etc.,  prejudice:     Boyd    v.     Ins.    Co.,    90 

Ins.  Co.,  39  Fed.  752  (1872).     There  Tenn.  212,  16  S.  W.  470  (1891). 

can  be  no  estoppel   where   the   in-  2  German   Ins.   Co.   v.   Gibson,   53 

sured   has  not  been   misled  to   his  Ark.  494,  14  S.  W.  672  (1890).     The 

(148) 


149          WAIVER   AND    ESTOPPEL   IN    CONTRACTS    OF   INSURANCE.     §    177 

§  177.  Knowledge  and  intent. — As  a  waiver  is  the  intentional 
relinquishment  of  a  right,  hoth  intent  and  knowledge  of  the  facts 
are  essential  elements.3  Hence,  to  establish  a  waiver  of  any  of  the 
rights  of  the  insurer  it  must  be  shown  that  there  was  "knowledge  on 
the  part  of  the  insurer  of  the  act  or  omission  on  the  part  of  the  in- 
sured which  it  claimed  to  have  dispensed  with  or  waived.  The  knowl- 
edge on  a  waiver  need  not  be  expressly  shown,  but  may  be  implied, 
when  the  act  of  commission  or  omission  is  of  such  a  character  as 
fairly  to  preclude  the  idea  of  ignorance."4 

§  178.  Basis  of  waiver. — It  has  been  held  that  a  waiver,  to  be 
operative,  must  be  supported  by  an  agreement  founded  upon  a  val- 
uable consideration,  or  the  acts  relied  upon  must  be  such  as  to  estop 
a  party  from  insisting  upon  a  performance  of  the  contract,  or  the 
forfeiture  of  the  conditions.5  This  rule  was  at  one  time  declared  in 
New  York,  but  it  was  subsequently  held  that  such  a  waiver  need  not 
be  based  upon  a  new  consideration  or  upon  facts  sufficient  to  establish 
an  estoppel,6  and  this  is  now  the  prevailing  rule.7  As  said  in  a 
Xew  York  case :  "While  the  later  decisions  all  hold  that  such  waivers 
need  not  be  based  upon  a  technical  estoppel  in  all  the  cases  where 
this  question  is  presented,  where  there  has  been  no  express  waiver, 
the  fact  is  recognized  that  there  exist  the  elements  of  an  estoppel."8 

waiver  of  a  forfeiture  gives  the  pol-  120  N.  Y.  510  (1890);  Titus  v.  Glens 

icy  the  same  force  and  effect  as  it  Falls  Ins.  Co.,  81  N.  Y.  410  (1880). 
originally  possessed :   Siltz  v.  Hawk-        T  Carpenter  v.  Continental  Ins.  Co., 

eye  Ins.  Co.,  71  Iowa  710,  29  N.  W.  61  Mich.  635  (1886);  Hollis  v.  State 

605  (1886).  Ins.  Co.,  65  Iowa  254  (1884);  Schimp 

3  Ryan  v.  Springfield,  etc.,  Ins.  Co.,  v.  Cedar  Rapids  Ins.  Co.,  124  111.  354 

46   Wis.    671    (1879);    Findeisen   v.  (1888);    Grubbs  v.  North  Carolina, 

Metropole    F.    Ins.    Co.,    57    Vt.    520  etc.,  Ins.  Co.,  108  N.  C.  472  (1891). 
(1885);    Diehl  v.  Adams,   etc.,   Ins.        'Armstrong   v.   Agricultural    Ins. 

Co.,  58  Pa.  St.  443,  98  Am.  Dec.  302  Co.,  130  N.  Y.  560   (1892);   German 

(1868).  Ins.    Co.    v.    Gibson,    53    Ark.    494 

*2  Biddle  Ins.,  §  1053.  (j.o</o).    "Nor  in  general,  where  the 

"Merchants',  etc.,  Co.  v.  Lacroix,  facts  do  not  constitute  an  estoppel, 

45  Tex.  158  (1876);  Weidert  v.  State  should  one  who  neither  knows  the 

Ins.   Co.,   19   Ore.   261,   24   Pac.   242  fact  of  the  forfeiture,  nor  is  charge- 

(1890).   See  Equitable  L.  Assur.  Soc.  able  with  fault  in  not  knowing  it, 

v.  McElroy,  83  Fed.  631,  28  C.  C.  A.  be  held  to  have  waived  the  same  by 

365  (1897).  acts  or  conduct  not  intended  to  have 

6Roby  v.  American  Cent.  Ins.  Co.,  such  effect:"     St.  Paul,  etc.,  Ins.  Co. 

v.  Parsons,  47  Minn.  352  (1891). 


AGENCY,    WAIVER   AND   ESTOPPEL. 


150 


§  179.  Effect  of  mere  silence. — A  waiver  can  not  be  inferred  from 
mere  silence.  Where  no  word  or  act  has  been  said  or  done  to  mislead 
the  insured  or  throw  him  off  his  guard,  mere  silence  will  not  sustain  a 
waiver.9 

§  180.  What  may  be  waived. — The  provisions  of  an  insurance 
contract  are,  almost  without  exception,  intended  for  the  benefit  of 
the  insured,  and  upon  their  breach  it  is  optional  with  the  insurer  to 
claim  a  forfeit.  Such  conditions  may,  hence,  be  waived.10  As  above 
stated,  mere  silence  will  not  amount  to  a  waiver,  but  in  some  states  it 
is  held  that  the  company  can  not  "sleep  upon  its  intention"  to  avoid  a 
policy  to  the  prejudice  of  the  insured.11 

Where  the  laws  of  the  state  or  the  charter  of  a  corporation  pro- 
vides that  an  act  shall  be  done,  and  prescribes  the  manner  in  which  it 
shall  be  done,  and  declares  the  act  void  if  done  otherwise,  the  insurer 
can  not  waive  the  performance  of  the  act  in  the  prescribed  manner.12 
Statutory  provisions  affecting  the  form  of  the  contract  can  not  be 
waived  by  the  parties.13 


•Titus  v.  Glens  Falls  Ins.  Co.,  81 
N.  Y.  410  (1880);  More  v.  New  York, 
etc.,  Ins.  Co.,  130  N.  Y.  537  (1892); 
Mueller  v.  South  Side  F.  Ins.  Co., 
87  Pa.  St.  399  (1878);  McAllaster  v. 
Niagara  F.  Ins.  Co.,  156  N.  Y.  80,  50 
N.  E.  502  (1898). 

10  Coursin  v.  Pennsylvania  Ins. 
Co.,  46  Pa.  St.  323  (1863);  Ellis  v. 
Massachusetts,  etc.,  Ins.  Co.,  113  Cal. 
612,  54  Am.  St.  373  (1895).  The 
furnishing  of  proofs  of  death  within 
a  definite  time  is  waived  by  a  letter 
from  the  company  asking  that  the 
claim  be  allowed  to  rest  until  the 
adjuster  of  the  company  can  see 
the  claimant:  Turner  v.  Fidelity, 
etc.,  Co.,  112  Mich.  425,  38  L.  R.  A. 
529  (1897).  The  company  waives 
the  provision  requiring  the  certifi- 
cate of  the  nearest  notary  public 
where  it  retains  the  one  furnished 
for  twenty-three  days,  and  then  ob- 
jects to  it  on  the  ground  that  there 


is  a  nearer  notary,  but  does  not 
give  his  name  or  address:  Paltro- 
vitch  v.  Phoenix  Ins.  Co.,  143  N.  Y. 
73,  25  L.  R.  A.  198  (1894). 

"Appleton  Iron  Co.  v.  British 
Amer.  Assur.  Co.,  46  Wis.  23  (1879). 

12  Cravens  v.  New  York  L.  Ins.  Co., 
148  Mo.  583,  71  Am.  St.  628  (1898); 
Leonard  v.  American  Ins.  Co.,  97 
Ind.  299  (1884). 

"Anderson  v.  Manchester  F.  As- 
sur. Co.,  59  Minn.  182  (1894);  N.  H. 
Pub.  St.  1891,  §  18.  An  insurance 
company  waives  the  right  to  re- 
build, although  the  thirty  days  pro- 
vided in  the  policy  within  which  to 
exercise  the  option  has  not  expired, 
where  it  has  expressly  refused  to  re- 
build and  given  notice  that  it  would 
pay  the  amount  of  the  loss  which 
might  be  fixed  by  arbitrators:  Platt 
v.  JEtna  Ins.  Co.,  153  111.  113,  26  L. 
R.  A.  853  (1894). 


151 


WAIVER   AND   ESTOPPEL   IN    CONTRACTS    OF   INSURANCE. 


181 


§  181.  Waiver  of  certain  defenses. — The  insurer  may  refuse  to 
pay  a  loss  without  specifying  the  ground  of  its  refusal  and  there- 
after insist  upon  any  defense  it  may  have  under  the  contract.14  It 
should  not  be  deprived  of  a  defense  merely  because  it  failed  to  dis- 
close it  to  the  other  party.  It  is  under  no  obligation  to  do  this,  but 
where  it  states  that  the  policy  will  not  be  paid  for  a  specified  reason 
it  is  estopped  to  assert  other  reasons  when  the  previous  statement 
showed  an  intention  to  abandon  other  defenses  or  resulted  in  injury 
to  the  insured.  Thus,  where  the  company,  with  knowledge  of  the 
forfeiture,  remains  silent  and  puts  the  insured  to  the  inconvenience 
and  expense  of  preparing  proofs  of  loss  which,  under  the  defense  of 
forfeiture,  was  wholly  unnecessary,  it  was  held  to  have  waived  the 
forfeiture.15 

"It  is  well  settled  that  such  defenses  are  waived  when  the  com- 
pany, with  knowledge  of  all  the  facts,  requires  the  assured,  by  virtue 
of  the  contract,  to  do  some  act  or  incur  some  expense  or  trouble  in- 
consistent with  the  claim  that  the  contract  had  become  inoperative 
in  consequence  of  the  breach  of  some  of  the  conditions/'16 


"  Devens  v.  Mechanics',  etc.,  Ins. 
Co.,  83  N.  Y.  168  (1880). 

"Thompson  v.  Phenix  Ins.  Co., 
136  U.  S.  287  (1890);  Fireman's 
Fund  Ins.  Co.  v.  Norwood,  69  Fed. 
71,  16  C.  C.  A.  136  (1895);  Marthin- 
son  v.  North  British,  etc.,  Ins.  Co., 
64  Mich.  372  (1887);  Phcenix  Ins. 
Co.  v.  Flemming,  65  Ark.  54,  39  L. 
R.  A.  789  (1898).  A  general  state- 
ment in  a  letter  calling  for  the 
proofs  of  the  loss,  that  the  company 
did  not  waive  any  manner  .of  de- 
fense, was  held  insufficient:  Mar- 
thinson  v.  North  British,  etc.,  Ins. 
Co.,  64  Mich.  372  (1887).  It  has 
been  held  that  the  company  waives 
a  cause  of  forfeiture  of  the  policy 
by  failure  to  mention  it  when  it  un- 
dertakes to  state  definitely  its  rea- 
sons for  denying  liability.  "Good 
faith  requires  that  the  company 
shall  apprise  the  plaintiff  of  its  po- 
sition, and,  failing  to  do  this,  it 
estops  itself  from  asserting  any  de- 


fense other  than  that  brought  to  the 
notice  of  the  plaintiff:"  Smith  v. 
German  Ins.  Co.,  107  Mich.  270,  30 
L.  R.  A.  368  (1895);  Towle  v.  Ionia, 
etc.,  Ins.  Co.,  91  Mich.  225,  51  N.  W. 
987  (1892),  and  cases  there  cited. 

16  Trippe  v.  Provident  Fund  Soc., 
140  N.  Y.  23,  22  L.  R.  A.  432  (1893); 
McNally  v.  Phoenix  Ins.  Co.,  137  N. 
Y.  389  (1893);  Granger  v.  Manches- 
ter F.  Assur  Co.,  119  Mich.  177,  77 
N.  W.  693  (1899).  In  Corson  v.  An- 
chor, etc.,  Ins.  Co.  (Iowa),  85  N.  W. 
806  (1901),  McClain,  J.,  said:  "Ap- 
pellant contends,  however,  that  by 
signing  what  is  called  a  'non-waiver 
agreement'  the  insured  cut  himself 
off  from  relying  on  these  acts  of  the 
adjuster  as  constituting  a  waiver  of 
the  forfeiture.  It  appears  that  the 
adjuster,  after  having  acquired 
knowledge  of  how  the  books  had 
been  kept,  insisted  that  before  he 
would  proceed  with  the  adjustment 
of  the  loss  the  insured  should  sign 


182 


AGENCY,    WAIVER   AND   ESTOPPEL. 


152 


§  182.  Power  of  agent  to  waive. — If  the  authority  of  the  agent 
is  general,  so  that  his  acts  are  the  acts  of  the  company,  he  can  waive 
a  provision  of  the  policy  if  it  is  of  such  a  character  that  it  could  have 
been  waived  by  the  company.17  He  can,  of  course,  waive  only  pro- 
visions which  are  in  respect  to  matter  within  the  scope  of  his  agency.18 


§  183.  Waiver  by  agent — Continued. — The  insured  may  rely  upon 
the  representations  of  an  agent  who  issues  the  policy  and  upon  his 
assumed  authority  to  waive  provisions  in  the  policy  when  there  are 
no  restrictions  upon  the  agent's  authority  which  are  brought  to  his 
knowledge.19  Where  the  policy  provided  that  additional  insurance, 
without  the  written  assent  of  the  company  indorsed  thereon,  would 
render  the  policy  void,  and  that  its  agents  had  no  power  to  waive 
such  condition,  the  court  said:20  "It  can  not  be  successfully  main- 
tained but  that  the  company  has  the  right  and  the  power  to  restrict 
as  it  may  choose  the  powers  and  duties  of  its  agents,  and  when  the 
authority  is  expressly  limited  and  restricted  by  the  policy  which  the 


this  agreement,  by  which  it  was 
stipulated  that  'nothing  said  adjust- 
er may  do  or  say  or  write  shall  in 
any  way  be  construed  as  waiving 
any  of  the  rights  or  defenses  of  said 
company,  or  any  conditions  or  re- 
quirements of  said  policy  as  to 
proofs  of  loss  or  otherwise.'  With 
reference  to  the  forfeiture  in  ques- 
tion, it  seems  to  us  that  this  agree- 
ment was  wholly,  immaterial.  The 
adjuster  must  be  presumed  to  have 
had  the  power  to  waive  a  forfeiture. 
Brown  v.  State  Ins.  Co.,  74  Iowa  428, 
38  N.  W.  135;  Ruthven  v.  American 
F.  Ins.  Co.,  102  Iowa  550,  560,  71  N. 
W.  574;  Brock  v.  Des  Moines  Ins. 
Co.,  106  Iowa  30,  75  N.  W.  683.  He 
did  proceed  to  adjust  the  loss,  and 
required  the  insured  to  furnish 
proofs,  including  the  procurement  of 
the  duplicate  invoices,  notwith- 
standing his  knowledge  of  the  facts 
amounting  to  a  forfeiture.  The  non- 
waiver clause  was  in  itself  a  part 
upheld  and  enforced.  It  clearly  re- 


lates to  future  transactions,  and  the 
agent  had  no  power  to  waive  the 
condition  when  he  took  the  applica- 
tion." But  a  failure  to  give  notice 
of  loss  as  required  by  the  policy  is 
not  waived  by  retaining  the  proofs 
of  loss  sent  after  the  policy  was 
dead  and  all  liability  on  it  had 
ceased,  where  the  insurer  gave  no- 
tice of  the  denial  of  any  liability  on 
the  policy:  Ermentrout  v.  Girard, 
etc.,  Ins.  Co.,  63  Minn.  305,  30  L.  R. 
A.  346  (1896). 

17  Kruger  v.  Western,  etc.,  Ins.  Co., 
72  Cal.  91  (1887);  Alexander  v.  Con- 
tinental Ins.  Co.,  67  Wis.  422  (1886). 

18  Imperial  F.  Ins.  Co.  v.  Dunham, 
117  Pa.  St.  460,  12  Atl.  668  (1888). 

"Kitchen  v.  Hartford  F.  Ins.  Co., 
57  Mich.  135  (1885). 

20  Cleaver  v.  Traders'  Ins.  Co.,  65 
Mich.  527  (1887).  To  the  same  ef- 
fect is  New  York  L.  Ins.  Co.  v. 
Fletcher,  117  U.  S.  519  (1886),  and 
Maier  v.  Fidelity,  etc.,  Ass'n,  47  U. 
S.  App.  322  (1897). 


153          WAIVER   AND   ESTOPPEL   IN    CONTRACTS    OF   INSURANCE.     §    184 

insured  receives  there  can  be  no  good  reason  either  in  law  or  equity 
why  such  limitations  and  restrictions  shall  not  be  considered  as  known 
to  the  insured  and  binding  upon  him.  *  *  *  The  fact  that  the 
plaintiff  may  not  have  read  the  printed  conditions  of  his  policy  and 
relied  in  ignorance  of  them  upon  the  implied  or  assumed  powers  of 
the  agent  can  not  help  him.  It  was  his  business  to  know  what  his 
contract  of  insurance  was,  and  there  can  be  no  difference  in  this  re- 
spect between  an  insurance  policy  and  any  other  contract.  In  the 
absence  of  any  fraud  in  making  the  same,  and  none  is  claimed  in  this 
case,  the  insured  must  be  held  to  a  knowledge  of  the  terms  of  this 
policy  as  he  would  be  in  case  of  any  other  contract  or  agreement. 
When  the  'policy  of  insurance,  as  in  this  case,  contains  an  express 
limitation  upon  the  power  of  the  agent,  such  agent  has  no  legal  right 
to  contract  as  agent  of  the  company  with  the  insured  so  as  to  change 
the  conditions  of  the  policy  or  to  dispense  with  the  performance  of 
any  essential  requisite  contained  therein  either  by  parol  or  writing; 
and  the  holder  of  the  policy  is  estopped  by  accepting  the  policy  from 
setting  up  or  relying  upon  powers  in  the  agent  in  opposition  to  con- 
ditions and  restrictions  in  the  policy."21  Where  a  policy  provides 
that  no  conditions  thereof  shall  be  waived  or  altered  unless  consent 
thereto  is  indorsed  on  the  policy,  and  the  company's  agent  consented 
to  a  removal  of  the  insured  stock  to  other  premises,  and  continued 
to  accept  premiums,  the  insurer  can  not  successfully  defend  an  action 
on  the  policy  on  the  ground  that  the  consent  was  not  binding  because 
not  indorsed  on  the  policy.22 

§  184.  Prepayment  of  premium. — An  agent  authorized  to  make 
contracts  of  fire  insurance  and  issue  policies  has  authority  to  waive 
payment  in  cash  of  premiums,  and  to  give  credit  therefor,  unless  there 
are  restrictions  upon  his  authority  of  which  the  insured  has  notice. 
If  the  agent  collects  the  premium  and  fails  to  pay  it  over  to  the  in- 
surance company,  the  rights  of  the  assured  are  not  affected  thereby. 
"By  the  weight  of  authority  the  agent  is  held  to  have  this  discretionary 
power,  although  the  policy  in  terms  denies  it.  The  waiver  of  the  pay- 
ment of  the  premium  in  cash  is  an  act  within  the  exercise  of  the 

21  See    also    Merserau    v.    Phoenix,  Bank  v.  Lancashire  Ins.  Co.,  62  Tex. 

etc.,  Ins.  Co.,  66  N.  Y.  274    (1876);  461   (1884). 

Catoir  v.  American  L.  Ins.,  etc.,  Co.,  22  Pollock  v.   German   P.   Ins.   Co. 

33  N.  J.  L.  487    (1886);    First  Nat.  (Mich.),  86  N.  W.  1016  (1901). 


§    185  AGENCY,   WAIVER  AND  ESTOPPEL.  154 

general  authority  to  issue  policies  and  collect  the  premiums,  and  such 
waiver  may  be  either  express  or  implied/'23 

§  185.  Waiver  in  writing  only. — Insurance  policies  ordinarily 
provide  that  their  terms  and  conditions  can  only  be  waived  or 
changed  by  an  indorsement  in  writing  upon  the  policy.  These 
provisions  are  construed  to  apply  only  to  conditions  which  enter  into 
and  form  part  of  the  contract,  and  which  are  essential  to  make  it 
binding,  and  not  those  which  refer  to  what  is  to  be  done  after  a  loss.2* 
Such  provisions  are  given  full  force  and  effect  by  some  courts  ;25  while 
others  limit  their  binding  force  to  sub-  or  special  agents,  and  hold 
that  general  officers  and  agents  of  the  company,  when  acting  within 
the  scope  of  their  authority,  may  waive  this  provision  by  an  oral 
stipulation.26  So,  the  company  may,  by  its  conduct,  be  estopped  to 
assert  that  a  waiver  in  a  manner  other  than  that  provided  in  the 
policy  is  binding.27  Where  an  agent  had  general  authority  the  court 
said:28  "He  had  power  to  bind  the  company  by  consenting  that  the 
policy  remain  in  force  notwithstanding  the  transfer  of  title  and  the 
sale  on  mortgage  foreclosure;  and,  notwithstanding  the  condition  of 
the  contract,  that  such  consent  should  be  indorsed  on  the  policy,  it 
might  be  given  otherwise.  The  company  could  not  by  such  a  pro- 
vision in  its  policy  divest  itself  of  the  power  to  afterward  enter  into 
another  agreement  and  stipulations  through  its  proper  agent  con- 
cerning the  risk." 

§  186.    Limitations  in  policy — Prepayment  of  premium. — An  agent 
whose  duties  were  to  solicit  insurance,  fill  up  blanks  and  printed 

23  Newark  Mach.  Co.  v.  Kenton  Ins.  Morrison  v.  North  Amer.  Ins.  Co.,  69 

Co.,  50  Ohio  St.  549,  22  L.  R.  A.  768  Tex.  353,  5  Am.  St.  63  (1887);  Bar- 

(1893);  Bodine  v.  Exchange  F.  Ins.  nard  v.  National  F.  Ins.  Co.,  38  Mo. 

Co.,  51  N.  Y.  117,  10  Am.  Rep.  566  App.  106  (1889). 

(1872);   Stewart  v.  Union,  etc.,  Ins.  20Renier    v.    Dwelling-House    Ins. 

Co.,  155  N.  Y.  257,  42  L.  R.  A.  147  Co.,  74  Wis.  89,  42  N.  W.  208  (1889). 

(1898).  "See,  generally,  Gans  v.  St.  Paul, 

"Carson  v.  Jersey  City  Ins.  Co.,  etc.,   Ins.  Co.,  43  Wis.   108    (1877); 

43  N.  J.  L.  300  (1881).  McFarland   v.    Kittanning    Ins.  Co., 

"Northern    Assur.    Co.    v.    Grand  134  Pa.  St.  590,  19  Atl.  796   (1890); 

View  Bldg.  Ass'n  (U.  S.),  22  Sup.  Ct.  Gould  v.  Dwelling-House  Ins.  Co.,  90 

133  (1902);  Gould  v.  Dwelling-House  Mich.  302  (1892). 

Ins.  Co.,  90  Mich.  302,  51  N.  W.  455  28  St.  Paul,  etc.,  Ins.  Co.  v.  Parsons, 

(1892);  Gladding  v.  California,  etc.,  47   Minn.   352    (1891);    Anderson  v. 

Ins.  Ass'n,  66  Cal.  6  (1884);  Enos  v.  Manchester  F.  Assur.  Co.,  59  Minn. 

Sun    Ins.    Co.,    67    Cal.    621    (1885);  182  (1894). 


155          WAIVEE   AND   ESTOPPEL    IN    CONTRACTS    OF   INSUKANCE.     §    186 

policies  already  signed  by  the  general  officers  of  the  company  and 
left  in  his  possession,  countersigned  and  delivered  a  policy  to  the 
assured  and  gave  him  temporary  credit  for  the  premium.  Before 
it  was  paid  the  property  was  destroyed,  and  the  question  was  whether 
the  company  was  bound  by  the  act  of  the  agent  in  waiving  immedi- 
ate payment  of  the  premium  and  giving  credit.  The  policy  con- 
tained a  provision  that  "no  insurance  shall  be  considered  as  bind- 
ing until  actual  payment  of  the  premium."  The  court  said:29  "It 
would  seem  well  settled  by  the  great  weight  of  authority  that,  at 
least  in  the  case  of  stock  companies,  a  person  dealing  with  an  agent 
possessing  the  powers  exercised  by  this  agent  has  a  right  to  assume, 
in  the  absence  of  notice  to  the  contrary,  that  he  has  authority  pending 
negotiations  for  a  contract  of  insurance  to  waive  a  provision  like  the 
one  quoted,  and  to  give  a  short  credit  for  the  premium.  But  it  is 
the  undoubted  right  of  the  company,  as  in  the  case  of  any  principal, 
to  impose  a  limitation  upon  the  authority  of  its  agent.  And  it  is  as 
elementary  as  it  is  reasonable  that  if  an  agent  exceeds  his  actual 
authority,  and  the  person  dealing  with  him  has  notice  of  that  fact, 
the  principal  is  not  bound.  The  policy  also  contained  a  provision 
that  'this  policy  is  made  and  accepted  upon  the  above  express  terms, 
and  no  part  of  this  contract  can  be  waived  except  in  writing,  signed 
by  the  secretary  of  the  company.'  The  words  'policy'  and  'contract' 
are  evidently  here  used  as  synonymous,  and  the  latter  clause  clearly 
means  that  none  of  the  terms  of  the  policy  can  be  waived  by  any  one 
except  the  secretary.  Conceding  that  this  would  not  prevent  the 
company  itself,  through  its  board  of  directors  or  other  body  represent- 
ing it  in  its  corporate  capacity,  from  waiving  any  of  the  terms  or  con- 
ditions of  the  policy,  yet  it  is  a  plain  declaration  that  no  representa- 
tive of  the  company  but  the  secretary  can  do  so,  and  hence  that  no 
local  agent  can  do  it.  This,  being  in  the  policy  itself,  was  notice  to 
plaintiff  that  this  agent  had  no  authority  to  waive  the  condition  that 
no  insurance  would  be  binding  till  payment  of  the  premium.  It  is 
no  answer  to  say  that  he  did  not  read  the  policy,  and  hence  did  not 
know  what  it  contained." 

^Wilkins    v.    State    Ins.    Co.,    43  Ins.  Co.  v.  Hoover.  113  Pa.  St.  591, 

Minn.  177,  45  N.  W.  1  (1890).     That  15  Am.  Rep.  511  .(1886);   Michigan 

an  agent  with  power  to  solicit  in-  Pipe  Co.  v.  Michigan,  etc.,  Ins.  Co., 

surance  and  issue  a  policy  has  im-  92  Mich.  482,  20  L.  R.  A.  277  (1893). 

plied  power  to  waive  prepayment  of  But  see  Tomsecek  v.  Travelers'  Ins. 

the  first  premium,  see  Lebanon  Mut.  Co.  (Wis.),  88  N.  W.  1013  (1902). 


AGENCY,    WAIVER   AND   ESTOPPEL. 


156 


§  187.  Estoppel  by  act  of  agent. — In  order  to  prevent  fraud  and 
injustice,  the  doctrine  of  estoppel  is  applied  where  the  insured  has 
been  misled  to  his  prejudice  by  the  agent  of  the  insurance  company. 
The  cases  in  which  this  rule  has  been  applied  may  be  classified  as 
follows : 

1.  Where  there  were  misrepresentations  by  the  agent  with  refer- 
ence to  some  facts  material  to  the  risks,  or  made  so  by  the  terms  of 
the  contract  contained  in  an  application  prepared  by  the  agent  in 
the  name  of  the  insured,  but  without  his  authority,  and  upon  which 
the  company  acted  in  issuing  the  policy.30 

2.  Where  the  agent,  having  been  authorized  by  the  insured  to  fill 
out  the  application  in  his  name,  misstates  by  a  mistake  or  inadver- 
tence the  information  given  by  the  insured  and  thereby  misleads  the 
compan}r.31 

3.  Where  the  policy  declares  that  certain  facts  or  conditions  will 
invalidate  the  policy  unless  disclosed  to  the  insurer  and  indorsed  on 


30  Benninghoff  v.  Agricultural  Ins. 
Co.,  93  N.  Y.  495  (1883);  Sprague  v. 
Holland,  etc.,  Ins.  Co.,  69  N.  Y.  128 
(1877);  Vilas  v.  New  York,  etc.,  Ins. 
Co.,  72  N.  Y.  590    (1878);    Ames  v. 
New  York,  etc.,  Ins.  Co.,  14  N.  Y.  253 
(1856);  Combs  v.  Hannibal,  etc.,  Ins. 
Co.,    43   Mo.   148,   97   Am.   Dec.    383 
(1869);  Kister  v.  Lebanon  Mut.  Ins. 
Co.,  128  Pa.  St.  553,  5  L.  R.  A.  646 
(1889). 

31  Rowley  v.   Empire   Ins.   Co.,   36 
N.  Y.  550  (1867);  Baker  v.  Home  L. 
Ins.  Co.,  64  N.  Y.  648  (1876);  Grat- 
tan  v.  Metropolitan  L.  Ins.  Co.,  92 
N.  Y.  274    (1883);   Bennett  v.  Agri- 
cultural   Ins.    Co.,    106    N.    Y.    243 
(1887);  Home  F.  Ins.  Co.  v.  Fallen, 
45  Neb.  554,  63  N.  W.  860    (1895); 
Home  Ins.  Co.  v.  Hancock   (Tenn.), 
52  L.  R.  A.   665    (1901),  and  cases 
cited  in  note;  Stone  v.  Hawkeye  Ins. 
Co.,  68  Iowa  737,  56  Am.  Rep.  870 
(1886);  Creed  v.  Sun  Fire  Office,  101 
Ala.  522,  23  L.  R.  A.  177,  Woodruff 
Ins.  Cas.  38   (1893).     In  some  cases 
this    rule    is    carried    almost    far 


enough  to  permit  estoppel  where  the 
agent  is  in  collusion  with  the  ap- 
plicant: See  Whitney  v.  National, 
etc.,  Ass'n,  57  Minn.  472,  59  N.  W. 
943  (1894);  Schwarzbach  v.  Ohio 
Valley,  etc.,  Union,  25  W.  Va.  622,  52 
Am.  Rep.  227  (1885);  Germania  L. 
Ins.  Co.  v.  Lunkenheimer,  127  Ind. 
536  (1890).  The  rule  that  a  breach 
of  warranty  of  the  truth  of  the  ap- 
plicant's answers  avoids  the  insur- 
ance policy  without  reference  to  his 
good  faith  or  the  materiality  of  the 
answer  does  not  apply  where  the 
falsity  of  the  answer  resulted  from 
a  mistake  in  judgment  or  a  blunder 
of  the  company's  agent,  who  was 
charged  by  the  company  with  the 
preparation  of  the  application,  and 
who  made  the  answers  upon  a  full 
and  truthful  statement  of  the  facts 
by  the  applicant:  Mutual,  etc.,  Ins. 
Co.  v.  Robison,  58  Fed.  723,  22  L.  R. 
A.  325,  7  C.  C.  A.  444  (1893).  See 
statement  of  rule  by  Judge  Cooley 
in  JEtna,  etc.,  Ins.  Co.  v.  Olmstead, 
21  Mich.  251,  4  Am.  Rep.  483  (1870). 


157          WAIVER    AXD    ESTOPPEL   IX    CONTRACTS    OF    INSURANCE.     §    188 

the  policy,  and  the  company  issues  the  policy  although  it  has  knowl- 
edge through  its  agent  of  the  facts  relied  upon  to  defeat  the  policy.32 

All  of  these  cases  relate  to  transactions  prior  to  the  completion  of 
the  contract. 

In  the  New  York  case33  in  which  the  above  classification  was  made 
it  was  held  that  "the  principle  which  relieves  the  party  insured  from 
responsibility  for  unauthorized  representations  made  by  the  agent  of 
the  insurer  in  respect  of  some  incident  of  the  risk,  and  permits  them 
to  be  disregarded  in  an  action  to  enforce  the  contract,  has  no  applica- 
tion where  the  point  in  issue  is  as  to  the  subject  of  the  insurance, 
and  the  contract  is  explicit  upon  that  point.  If  the  contract  of  in- 
surance relates  to  one  definite  and  distinct  subject  it  can  not  be  turned 
into  a  contract  for  the  insurance  of  another  and  different  subject  on 
proof  that  the  agent  of  the  company,  by  mistake,  described  the  wrong 
property  in  his  application/' 

§  188.    Facts  known  to   company  when  policy   issued. — By  the 

weight  of  authority,  although  the  supreme  court  of  the  United  States, 
under  a  contract  which  required  a  waiver  to  be  indorsed  on  the  policy, 
recently  held  to  the  contrary,34  an  insurance  company  will  not  be  per- 
mitted to  take  advantage  of  a  condition  contained  in  the  policy  to  avoid 
payment  of  a  loss  when  the  facts  rendering  the  policy  void  by  its  terms 
were  known  to  the  insurer  at  the  time  it  issued  the  policy  and  ac- 
cepted the  premium.  Such  a  policy,  if  void,  is  void  from  the  mo- 
ment of  its  delivery.  This  doctrine  rests  upon  the  ground  that  facts 
made  known  to  the  agent  of  the  company,  who  is  empowered  by  it  to 
solicit  insurance,  countersign  and  issue  policies  and  collect  premiums, 
are  known  to  the  principal,  and  that  a  fraud  would  be  perpetrated 
if  an  insurer,  through  the  medium  of  its  agents,  were  allowed  to 
deliver  its  policy  and  accept  the  premium  with  knowledge  of  facts 
which  under  its  provisions  rendered  it  void  ab  initio,  and  thereafter 
assert  its  invalidity.35  Thus,  where  the  insured  warranted  that  "a 

32  Van  Schoick  v.  Niagara  F.  Ins.  was  estopped  to  assert  a  forfeiture: 

Co.,  68  N.  Y.  434  (1877);  Richmond  Goode  v.  Georgia,  etc.,  Ins.  Co.,  92 

v.  Niagara  F.  Ins.  Co.,  79  N.  Y.  230  Va.  392,  30  L.  R.  A.  842  (1895). 

(1879);   Short  v.  Home  Ins.  Co.,  90  33  Sanders  v.  Cooper,  115  N.  Y.  279 

Is.  Y.  16    (1882).     Where  the  omis-  (1889). 

sion   to   mention   incumbrance   and  34  Northern    Assur.    Co.    v.    Grand 

other   insurance    in   an   application  View  Bldg.  Ass'n,   22   Sup.   Ct.   133 

was  by  the  advice  of  the  solicitor  (1902). 

who  issued  the  policy  in  the  name  ^  Fireman's  Fund  Ins.  Co.  v.  Nor- 

of    the    agent,    and     who    had    full  wood,    16    C.    C.    A.    136     (1895); 

knowledge  of  the  facts,  the  company  Northern     Assur.     Co.     v.     Grand 


§  188 


AGENCY,    WAIVER   AND   ESTOPPEL. 


158 


continuous  clear  space  of  one  hundred  and  fifty  feet  shall  hereafter 
be  maintained"  between  the  property  insured  and  a  certain  building, 


View  B.  Ass'n,  101  Fed.  77,  41  C. 
C.  A.  207  (1900)  [but  this  case 
was  reversed  in  22  Sup.  Ct.  133 
(1902)].  These  cases  present  a  very 
full  review  of  the  authorities  on 
both  sides  of  the  question,  as  Judge 
Sanborn  filed  dissenting  opinions  in 
each  case.  See  also  Home  Ins.  Co. 
v.  Mendenhall,  164  111.  458,  36  L.  R. 
A.  374  (1897);  Mesterman  v.  Home 
Mut.  Ins.  Co.,  5  Wash.  524,  34  Am. 
St.  877  (1893);  Independent  School 
Disk  v.  Fidelity  Ins.  Co.  (Iowa),  84 
N.  W.  956  (1901).  Where  the  agent 
of  the  company  knew  at  the  time 
that  the  policy  was  issued  that  firs- 
works  were  intended  to  be  kept  on 
the  premises,  the  issuance  of  the 
policy  under  such  circumstances  is 
a  waiver  of  a  condition  therein  for- 
bidding the  keeping  of  fire-works. 
"It  is  now  too  well  settled  to  require 
discussion  that  the  issuance  of  a 
policy  of  insurance  with  a  knowl- 
edge of  facts,  which  by  the  terms  of 
the  policy  render  it  void,  will  be 
treated  as  a  waiver  of  such  ground 
of  forfeiture.  This  is  true  even 
though  the  policy  contains  a  stipu- 
lation that  the  conditions  of  the 
policy  shall  not  be  waived  by  any 
officer  or  agent  of  the  company  un- 
less such  waiver  be  indorsed  upon 
the  policy.  It  is  a  general  rule  of 
law  that  the  parties  to  a  written  con- 
tract may  afterward  change  or  alter 
such  contract  by  a  parol  agreement 
to  that  effect,  and  contracts  with  in- 
surance companies  furnish  no  excep- 
tion to  this  rule:"  Phoenix  Ins.  Co. 
v.  Flemming,  65  Ark.  54,  39  L.  R.  A. 
789  (1898);  Dwelling-House  Ins.  Co. 
v.  Brodie,  52  Ark.  11,  4  L.  R.  A.  458 
(1889).  "It  has  uniformly  been  held 
by  this  court  that  a  condition  of  this 
character  in  a  contract  of  insurance 


will  not  operate  to  avoid  it  after  a 
loss,  providing  the  company  before 
the  delivery  of  the  policy  had  knowl- 
edge of  the  fact  that  the  insured, 
notwithstanding  the  warranty  or  a 
statement  to  that  effect,  was  not  the 
owner,  or  that  it  was  incumbered. 
in  such  cases  the  company  is 
deemed  to  have  waived  the  condi- 
tion by  the  delivery  of  the  policy, 
with  a  condition  avoiding  it  in  case 
the  insured  is  not  the  sole  owner,  or 
that  the  property  is  incumbered, 
and  accepting  the  premium,  and  is 
held  to  be  estopped  from  setting  up 
the  condition  as  a  defense.  It  was 
never  supposed  that  such  a  condi- 
tion was  intended  to  apply  to  a  state 
of  facts  in  regard  to  which  the  com- 
pany had  been  fully  informed  when 
it  accepted  the  risk:"  Forward  v. 
Continental  Ins.  Co.,  142  N.  Y.  382, 
25  L.  R.  A.  635  (1895).  The  knowl- 
edge of  the  agent  that  the  insured 
had  made  a  contract  for  the  sale  of 
the  property  covered  by  the  policy 
estops  the  company  from  denying 
that  he  had  the  sole  and  uncondi- 
tional ownership  required  by  the 
policy:  Hamilton  v.  Dwelling-House 
Ins.  Co.,  98  Mich.  535,  22  L.  R.  A. 
527  (1894).  The  knowledge  of  the 
secretary  of  the  company  when  is- 
suing the  policy  that  there  is  other 
insurance,  which  the  insured  agrees 
to  let  expire,  prevents  the  forfeiture 
of  the  policy  for  a  false  statement  in 
the  application  that  there  is  no  other 
insurance:  Dailey  v.  Preferred,  etc., 
Ass'n,  102  Mich.  289,  26  L.  R.  A.  171. 
See  also  Reed  v.  Equitable,  etc.,  Ins. 
Co.,  17  R.  I.  785,  18  L.  R.  A.  496 
(1892).  As  to  the  effect  of  knowl- 
edge by  the  company's  agent  of  the 
falsity  of  statements  in  the  applica- 
tion, see  Clemans  v.  Supreme  Assem- 


159          WAIVER   AND   ESTOPPEL   IN    CONTRACTS    OF   INSURANCE.     §    188 

and  the  agent  of  the  insurer  knew  that  the  existing  facts  were  other- 
wise, and  that  it  was  not  within  the  power  of  the  insured  to  change 
them,  the  policy  was  held  valid.  The  court  said  :36  "The  defendant 
insists  that  the  clause  must  be  rendered  literally  and  without  reference 
to  the  knowledge  of  the  agent  as  to  what  the  actual  distance  was, 
thereby  asserting  that  it  has  the  right  to  accept  the  money  of  the  in- 
sured, issue  its  policy  therefor  and  lead  it  to  understand  that  it  has  a 
valid  insurance  until  a  loss  occurs,  and  then  to  repudiate  its  liability. 
Such  a  rule  as  this  would  enable  it  to  affirm  a  contract  entered  into 
by  it  with  full  knowledge  of  all  the  facts,  in  so  far  as  said  contract 
might  be  of  advantage  to  it,  and  to  repudiate  it  the  moment  it  ceased 
to  be  advantageous.  This  is  inequitable  and  contrary  to  the  well- 
established  rule  in  reference  to  when  and  how  the  repudiation  of  a 
contract  shall  be  made.  The  knowledge  of  the  agent  is  the  knowl- 
edge of  the  company.  If  the  insurer  receives  the  premium  with  full 
knowledge  of  facts  constituting  a  breach  of  one  of  the  conditions  of 
the  policy,  the  right  to  insist  that  the  policy  is  forfeited  for  that 
cause  is  gone."  In  Kentucky  it  was  recently  held37  that  the  rule 
which  charges  the  insurer  with  the  knowledge  of  its  agent  of  errors 
or  misstatements  in  the  application  is  not  affected  by  a  condition  in 
the  policy  that  the  insured  shall  be  responsible  for  the  acts  of  the 
agent  who  makes  out  the  application.  A  renewal  policy  of  fire  in- 
surance was  issued  to  an  ignorant  and  illiterate  person  without  a 
written  application,  by  an  agent  who  had  full  power  to  write  insur- 
ance and  deliver  the  policy  without  reference  to  the  home  office.  It 
was  held  that  the  insurer  was  bound  by  the  knowledge  of  the  con- 
dition of  the  title  of  the  insured,  although  he  may  have  acquired 
such  knowledge  in  business  having  no  connection  with  the  insurance.38 
With  reference  to  the  conditions  in  the  policy  aforesaid,  "the  sub- 
agent,  or  the  agent  of  the  principal  agent,  appeared  and  solicited 
a  renewal  of  the  policy;  and  it  was  then  signed  and  filled  up  at  the 
agent's  office  and  delivered  to  the  appellee.  We  are  not  disposed  to 
adjudge  that  such  contracts,  shingled  over  with  stipulations  that  are 
practically  deceptive,  if  not  inserted  for  that  purpose,  are  binding 
on  the  ignorant  and  illiterate  when  guilty  of  no  fraud  or  misrepre- 

bly,  131  N.  Y.  485,  16  L.  R.  A.  33  Ins.  Co.,  94  Mich.  389,  53  N.  W.  945 

(1892),  annotated.     To  the  same  ef-  (1892). 

feet,  see  Bowling  v.  Lancashire  Ins.  "  Hartford  F.  Ins.  Co.  v.  Haas,  87 

Co.,    92    Wis.    63,    31    L.    R.   A.    112  Ky.  531,  2  L.  R.  A.  64  (1888). 

(1900).  »  But  see  §  164,  supra. 
"Michigan,  etc.,  Co.  v.  State,  etc., 


§    188  AGENCY,    WAIVER   AND    ESTOPPEL.  160 

sentation,  but  had  trusted  alone  to  the  superior  knowledge  of  the 
agent,  who  undertakes  to  make  such  an  application  or  to  issue  such 
a  policy  as  will  meet  the  requirements  of  the  company  he  represents. 
The  statements  embodied  in  a  policy  issued  under  such  circumstances, 
if  false  or  erroneous,  should  be  regarded  as  the  act  of  the  insurer." 
This  rule  has  been  adopted  by  the  statutes  of  some  of  the  states. 

A  provision  in  the  policy  that  the  knowledge  of  the  agent  of  matters 
not  stated  in  the  application  shall  not  bind  the  company  does  not  pre- 
vent the  insured  from  showing  that  he  made  true  answers,  but  that 
they  were  wrongfully  recorded  by  the  agent  of  the  company.40  Nor 
will  a  similar  provision  prevent  the  insured  from  having  the  con- 
tract rescinded  where  he  was  induced  to  enter  into  it  by  the  fraudu- 
lent representations  of  the  agent  of  the  company.41 

But  the  doctrine  of  estoppel  which,  as  a  general  rule,  is  applicable 
when  the  policy  is  issued  with  knowledge  of  the  facts  does  not  apply 
when  the  policy,  as  a  contract,  is  contrary  to  law.42  It  is  said  that  the 
knowledge  of  the  agent  of  facts  which  will  defeat  the  policy  estops 
the  company  only  when  there  is  no  application  signed  by  the  assured.43 
The  court  said :  "The  cases  in  which  knowledge  of  the  agent  through 
whom  insurance  is  taken  may  operate  to  defeat  the  right  of  the  com- 

40  Parno  v.  Iowa,  etc.,  Ins.  Co.  take  the  statement,  and  acted  under 
(Iowa),  86  N.  W.  210  (1901).  The  that  authority  when  he  wrote  it, 
court  said:  "It  is  sought  to  distin-  plaintiff  was  not  charged  with,  the 
guish  these  cases  on  the  ground  that  duty  of  seeing  to  it  that  it  was  cor- 
in  the  policy  in  suit  the  answers  of  rectly  taken.  He  had  the  right  to 
the  applicant  were  made  warranties,  assume  that  this  was  done.  It  would 
But  that  was  also  the  fact  in  a  num-  be  manifestly  unjust  to  hold  that  he 
ber  of  the  cases  in  which  the  rule  was  bound  absolutely  by  a  state- 
stated  has  been  indorsed  by  this  ment  which  was  wrongfully  inter- 
court.  In  Stone  v.  Hawkeye  Ins.  polated  into  the  application  by  de- 
Co.,  68  Iowa  737,  28  N.  W.  47,  in  fendant,  and  which  he  dm  not  know 
which  the  facts  were  similar  to  was  there  when  he  consented  to  the 
those  before  us,  it  is  said:  'It  makes  agreement.'"  But  see  U.  S.  Life 
no  difference,  we  think,  that  plaint-  Ins.  Co.  v.  Smith,  92  Fed.  503  (1899). 
iff  agreed  that  the  representations  41  McCarty  v.  New  York  L.  Ins.  Co.. 
in  the  application  should  be  regard-  74  Minn.  530,  77  N.  W.  426  (1898). 
ed  as  warranties  by  him.  He  con-  a  Spare  v.  Home  Mut.  Ins.  Co.,  17 
sented  to  that  agreement  in  the  be-  Fed.  568  (1883). 
lief  that  the  agent  had  written  down  43  Kenyon  v.  Knights,  etc.,  Ass'n, 
in  the  application  the  very  state-  122  N.  Y.  247  (1890).  See  note  to 
ment  he  had  made.  As  the  agent  Hoose  v.  Prescott  Ins.  Co.  (Mich.), 
was  empowered  by  the  company  to  11  L.  R.  A.  340  (1890). 


161          WAIVER   AND    ESTOPPEL    IN    CONTRACTS    OF    INSURANCE.     §    189 

pany  to  avail  itself  of  the  fact  so  known  at  the  time  it  is  taken  are 
those  in  which  there  is  no  application  signed  by  the  assured  stating  to 
the  contrary  of  such  existing  facts,  but  rests  upon  a  condition  ex- 
pressed in  the  policy  merely.  Then  it  may  be  presumed  that  the  state- 
ment of  it  in  the  policy  as  required  by  the  condition  was  omitted  by 
mistake  or  waived/'  But  there  are  cases  which  go  much  farther  than 
this  and  apply  the  rule  where  the  statements  are  inserted  in  an  appli- 
cation and  warranted. 

But  the  company  is  not  estopped  by  the  knowledge  of  the  agent  that 
the  insured  intends  to  violate  one  of  the  conditions  of  the  policy. 
Thus,  knowledge  on  the  part  of  a  fire  insurance  company's  soliciting 
agent  at  the  time  of  the  issuance  of  the  policy  that  the  insured  does 
not  intend  to  comply  with  the  condition  requiring  him  to  keep  a  set  of 
books,  and  to  take  and  preserve  an  inventory,  to  be  produced  in  case  of 
loss,  does  not  estop  the  company  from  setting  up  the  insured's  non- 
compliance  with  the  condition  as  a  defense  to  a  claim  for  loss.  The 
effect  of  future  conduct  is  determined  by  the  terms  of  the  contract.44 

§  189.  Oral  testimony  to  show  actual  statements. — Where  the 
agent  writes  erroneous  statements  in  the  application,  the  prevailing 
rule  is  that  oral  testimony  may  be  received  to  show  the  fact.  It  was 
said  in  the  supreme  court  of  the  United  States:  "The  testimony 
was  admitted,  not  to  contradict  the  written  warranty,  but  to  show  that 
it  was  not  the  warranty  of  D,  though  signed  by  him,  prepared  as  it 
was  by  the  company's  agent,  and  the  answers  having  been  made  by  the 
agent,  the  proposal,  both  questions  and  answers,  must  be  regarded  as 
the  act  of  the  company,  which  it  can  not  be  permitted  to  set  up  as  a 
warranty  by  the  assured."45  So,  in  Pennsylvania  it  was  said,  with 

"Sowers  v.  Mutual  F.  Ins.  Co.  86  N.  W.  210  (1901),  it  was  said: 

(Iowa),  85  N.  W.  763  (1901);  Gray  "Appellant's  next  contention  is  that 

v.  Germania  F.  Ins.  Co.,  155  N.  Y.  the  matter  of  estoppel  is  not  suscep- 

180,  49  N.  E.  675  (1898).  tible  of  proof,  because  it  would  ne- 

45  Insurance  Co.  v.  Mahone,  21  cessitate  the  contradiction  of  the 

Wall.  (U.  S.)  152  (1874);  Insur-  terms  of  a  writing  by  parol  evi- 

ance  Co.  v.  Wilkinson,  13  Wall,  dence.  It  is  the  rule  in  this  state 

(U.  S.)  222  (1871);  Fireman's  that  where  the  assured  has  returned 

Fund  Ins.  Co.  v.  Norwood,  69  Fed.  truthful  answers  to  the  agent  of  the 

71,  16  C.  C.  A.  136  (1895),  where  company,  who  has  recorded  them 

the  authorities  are  cited  and  incorrectly  in  the  application,  the 

reviewed  by  Judge  Caldwell.  In  facts  may  be  shown  by  oral  evi- 

Parno  v.  Iowa,  etc.,  Ins.  Co.  (Iowa),  dence,  to  estop  the  company  from 

11 — ELLIOTT  INS. 


§    189  AGENCY,    WAIVER   AND   ESTOPPEL.  162 

reference  to  certain  cases:  "In  each  there  was  no  question  but  that 
the  warranty  was  made,  and  it  was  conceded  that  if  there  were  a 
mutual  mistake  between  the  contracting  parties,  parol  evidence  is  ad- 
missible to  reform  the  policy.  None  declares  that  the  fraud  or  mis- 
take of  a  knavish  or  blundering  agent,  done  within  the  scope  of  the 
powers  given  him  by  the  company,  will  enable  the  latter  to  avoid  a 
policy  to  the  injury  of  the  assured,  who  innocently  became  a  party  to 
the  contract.  The  authorities  go  far, — very  likely  not  too  far, — in 
holding  the  assured  responsible  for  his  warranty,  and  in  excluding 
oral  evidence  to  contradict  or  vary  it;  but  they  do  not  establish  that 
where  an  agent  of  the  assurer  has  cheated  the  assured  into  signing  the 
warranty  and  paying  the  premium,  and  the  policy  was  issued  upon  the 
false  statements  of  the  agent  himself,  the  assured  shall  not  prove  the 
fact  and  hold  the  principal  to  the  contract  as  if  he  had  committed  the 
wrong."46 

Massachusetts,  New  Jersey  and  Ehode  Island  refuse  to  recognize 
this  rule,  and  hold  that  a  waiver  of  the  forfeiture  existing  at  the  in- 
ception of  the  contract  can  not  be  shown  by  oral  testimony  of  what 
occurred  at  or  before  the  closing  of  the  contract.47  Even  in  these 
states,  a  waiver  occurring  after  the  inception  of  the  contract  may  be 
shown  by  parol.48 

setting  up  the  statements  in  the  ap-  Protective,  etc.,  Ins.  Co.,  89  Pa.  St. 
plication  as  a  defense.  Warshawky  464  (1879),  quoted  in  Kister  v.  Leb- 
v.  Anchor,  etc.,  Ins.  Co.,  98  Iowa  221,  anon  Mut.  Ins.  Co.,  128  Pa.  St.  553, 
67  N.  W.  237;  Carey  v.  Home  Ins.  5  L.  R.  A.  646  (1889). 
Co.,  97  Iowa  619,  66  N.  W.  920;  Me-  4T  Batchelder  v.  Queen  Ins.  Co.,  135 
Comb  v.  Council  Bluffs  ins.  Co.,  83  Mass.  449  (1883);  Dewees  v.  Man- 
iowa  247,  48  N.  W.  1038;  Jamison  v.  hattan  Ins.  Co.,  35  N.  J.  L.  366 
State  Ins.  Co.,  85  Iowa  229,  52  N.  W.  (1872);  Reed  v.  Equitable,  etc.,  Ins. 
185;  Reynolds  v.  Iowa,  etc.,  Ins.  Co.,  Co.,  17  R.  I.  785,  24  Atl.  833  (1892). 
80  Iowa  563,  46  N.  W.  659;  Key  v.  In  the  last  case  it  was  said:  "We 
Des  Moines  Ins.  Co.,  77  Iowa  174,  41  recognize  the  tendency  of  the  de- 
N.  W.  614.  In  Donnelly  v.  Cedar  Rap-  cisions  in  favor  of  the  assured,  and 
ids  Ins.  Co.,  70  Iowa  692,  28  N.  W.  if  this  were  a  new  question  in  this 
607,  the  court  says  that  the  parol  state,  we  might  feel  compelled  to 
evidence  in  such  a  case  is  not  intro-  yield  to  the  weight  of  authority, 
duced  for  the  purpose  of  contradict-  Opposed  to  this  line  of  decisions 
ing  the  written  contract,  but  only  to  Massachusetts  has  stood  almost 
estop  the  company  from  setting  up  alone,  with  a  sturdiness  character- 
as  a  defense  the  falsity  of  the  state-  istic  of  that  old  commonwealth." 
ments  in  the  application."  48  Oakes  v.  Manufacturers'  Ins.  Co., 
"Trunkey,  J.,  in  Eilenberger  v.  135  Mass.  248  (1883);  Metropolitan 


163          WAIVER   AND   ESTOPPEL   IN    CONTRACTS    OF   INSURANCE.     §    190 

§  190.  Bad  faith — Collusion  between  applicant  and  agent. — Where 
there  is  collusion  between  the  applicant  and  the  agent  of  the  company, 
knowledge  of  the  fraud  attempted  by  the  applicant  can  not  be  imputed 
to  the  company,  and  made  the  basis  of  an  estoppel.49  The  principal  is 
bound  by  the  acts  of  his  agent  while  he  acts  within  the  scope  of  his 
reputed  authority,  but  if  he  commits  a  fraud  upon  his  principal,  an 
applicant  who  is  particeps  criminis  will  not  be  allowed  to  profit  by  the 
fraud.50 

L.  Ins.  Co.  v.  McTague,  49  N.  J.  L.  Blooming   Grove,   etc.,    Ins.   Co.   v. 

587  (1887).  McAnerney,  102  Pa.  St.  335,  48  Am. 

48  Centennial,   etc.,   Ass'n   v.   Par-  Rep.  209  (1883). 

ham,    80   Tex.    518,   16    S.   W.    316  MHanf     v.     Northwestern,     etc., 

(1891).    Where  an  untrue  answer  is  Ass'n,   76  Wis.  450,  45  N.  W.  315 

written  with  the  consent  of  the  ap-  (1890);    Eilenberger  v.   Protective, 

plicant,  there  can  be  no  recovery:  etc.,  Ins.  Co.,  89  Pa.  St.  464  (1879). 


PART  VI. 

THE  STANDARD  POLICY  AND  ITS  PROVISIONS. 


CHAPTER  X. 


PROVISIONS   OF   THE    STANDARD   POLICY. 


SEC. 

200.  In  general. 

201.  The     Massachusetts     standard 

policy. 

202.  The  New  York  standard. 


SEC. 

203.  The  binding  clause. 

204.  Construction    of    the    standard 

policy. 

205.  Effect  of  breach  of  condition. 


A.    PROVISIONS  RELATING  TO  MATTERS  BEFORE  Loss. 


Formal  Part  of  Contract. 


SEC. 

206. 
207. 
208. 
209. 
210. 

211. 
212. 
213. 

214. 

215. 
216. 


217. 
218. 

219. 
220. 
221. 
222. 


-In 


Parties. 

The  premium. 

Term  of  insurance. 

The  amount. 

Description  of  the  property 
general. 

Goods  held  in  trust. 

May  cover  shifting  stock. 

Ambiguous  descriptions  —  Ref- 
ormation. 

Presumption  as  to  nature  of 
business. 

Descriptions,  when  warranties. 

Description  of  merchandise — 
What  included  in  the  descrip- 
tion. 

Description  of  buildings. 

Location  of  property — In  gen- 
eral. 

Location  material. 

Illustrations. 

Risks  insured  against. 

Proximate  cause  —  Electric 
wires. 

(164) 


77.  Authorization  of  Agent. 

SEC. 

223. 

777. 

224. 


Agency. 

Application  and  Survey. 

Application  a  part  of  the  policy. 


IV. 

225. 
226. 

227. 
228. 
V. 
229. 
230. 
231. 
232. 
233. 
234. 
235. 

VI. 
236. 
237. 


Misconduct  of  Insured  in  Pro- 
curing Policy. 

Entirety  of  contract. 

Concealment  and  misrepresen- 
tation. 

Statement  of  interest. 

Fraud  and  false  swearing. 
Excluded  Risks. 

Invasion,  riot,  etc. 

Theft. 

Neglect  to  protect  property. 

Explosion. 

Lightning. 

Fall  of  building. 

City  ordinances. 

Excluded  Property. 
Exceptions  and  limitations. 
Plate  glass,  frescoes  and  decora- 
tions. 


165  IN   GENEEAL.  §    200 

§  200.  In  general. — A  common  form  of  marine  policy  has  been  in 
use  since  the  adoption  of  Lloyds'  policy  in  1779.  This  instrument 
was  characterized  by  Mr.  Justice  Buller  as  "absurd  and  incoherent," 
but  the  meaning  of  its  language  has  become  fixed  by  custom  and 
judicial  decision.  The  movement  toward  a  standard  form  of  policy 
for  fire  insurance  began  as  early  as  1821,  when  a  form  was  adopted 
by  a  committee  of  New  York  underwriters  which  gradually  came  into 
use  by  the  different  companies. 

In  1867  the  legislature  of  Connecticut  passed  a  law  which  required 
the  use  of  a  common  form  in  that  state,  but  it  met  with  so  much 
opposition  on  the  part  of  the  insurance  companies  that  the  statute 
was  repealed  the  following  year.1  Standard  forms  are  now  required 
by  the  statutes  of  fourteen  states,  and  it  is  very  probable  that  similar 
laws  will  soon  be  enacted  in  the  other  states  of  the  Union. 

§  201.  The  Massachusetts  standard  policy. — In  1873  the  legisla- 
ture of  Massachusetts  provided  for  a  form  which,  after  various  modi- 
fications, became  the  present  standard  policy,  which  went  into  effect 
in  1887.  The  principal  difference  between  this  policy  and  what  has 
since  become  known  as  the  New  York  standard  policy  is  the  provision 
which  permits  the  parties  to  modify  its  language  by  riders  attached 
to  the  policy. 

The  New  Hampshire  form  was  adopted  in  1885,  and  is  modeled 
after  that  of  Massachusetts,  with  such  changes  as  were  rendered 
necessary  by  the  New  Hampshire  statutes,  portions  of  which  are  re- 
quired to  be  printed  upon  the  back  of  the  policy  and  form  part  of 
the  contract. 

Maine  also  followed  Massachusetts,  and  in  1895  provided  for  a 
standard  form  which  should  be  as  nearly  as  practicable  the  same  as 
that  of  Massachusetts. 

The  Minnesota  act  of  18892  imposed  upon  the  insurance  com- 
missioner the  duty  of  preparing  a  form  which  should  become  obliga- 
tory after  that  year.  The  New  York  form  was  prepared  and  went 
into  use,  but  the  statute  was  held  unconstitutional  because  it  was 
attempted  to  delegate  legislative  powers  to  the  insurance  commis- 


1  Conn.  Laws  1867,  ch.  121.  2  Minn.    Gen.    Stat.    1894,    §  3200 

(Gen.  Laws  1889,  ch.  217). 


§    202  THE  STANDARD  POLICY.  166 

sioner.3  In  18954  the  legislature  adopted  the  Massachusetts  instead 
of  the  New  York  form,  with  such  modifications  as  were  necessary 
to  prevent  conflict  with  the  valued-policy  law  then  in  force.  Eiders 
were  permitted  to  explain  or  modify  the  policy.  The  insurance 
companies  adopted  a  general  rider  which  embraced  substantially  the 
provisions  of  the  New  York  standard  policy,  but  the  legislature  of 
1897  prohibited  the  use  of  the  co-insurance  rider,  and  the  making  of 
changes  of  any  kind  except  as  specifically  authorized  by  the  act. 

§  202.  The  New  York  standard. — What  is  known  as  the  New  York 
standard  form  of  policy  went  into  effect  on  the  first  day  of  May,  1887.5 
It  does  not  permit  riders  which  change  any  of  its  conditions,  like  the 
Massachusetts  and  New  Hampshire  forms.  All  variations  from  the 
prescribed  form  are  provided  for  by  "clauses"  which  may  be  attached 
to  the  policy,  and  which  are  known  as  the  Application  and  Survey 
Clause,  Assessment,  Installment  or  Credit  Clause,  Co-insurance 
Clause,  Conditions  as  to  Incumbrauces,  Lightning  Clause,  Mortgage 
Clauses,  Percentage,  Limitation  and  Value  Clauses. 

Most  of  the  states  have  followed  this  form.  It  was  adopted  by 
Michigan  in  1889,  by  North  Dakota  in  1890,  New  Jersey  in  1892, 
North  Carolina  in  1893,  South  Dakota  in  1893,  Connecticut  in  1894, 
Rhode  Island  in  1895,  Iowa  in  1897,6  and  Louisiana  in  1898. 

In  1891  Wisconsin  passed  a  law  which  directed  the  insurance  com- 
missioner to  prepare  a  form  which  should  conform  to  the  New  York 
standard  policy,  and  provided  that  five  days'  notice  of  cancellation 
by  the  company  should  be  given,  and  provided  also  that  proof  of  loss 
should  be  made  within  sixty  days  after  the  fire.  This  policy  went 
into  effect  in  1891.  In  1895,  the  question  having  arisen  as  to  the 
constitutionality  of  the  legislation,  the  standard  policy  was  enacted 
in  the  form  of  a  statute.  Some  important  changes  were  made  at 

Anderson   v.   Manchester  F.   As-  The  Wisconsin  statute  of  1891  was 

sur.   Co.,    59   Minn.    182,    60   N.   W.  subject  to  the  same  objections,  but 

1095,    63    N.    W.    241    (1894).      The  it  was  cured  in  1895. 

Pennsylvania  act  of  1891  has  been  *  Minn.  Laws  1895,  ch.  175. 

held    unconstitutional    by    the    su-  'Provided    for    by    N.    Y.    Laws 

preme  court  of  the  state  in  O'Neil  1886,  ch.  488. 

v.  American  F.  Ins.  Co.,  166  Pa.  St.  8  Iowa  has  not  prescribed  a  com- 
72  (1894).  An  attempt  to  cure  the.  plete  form  of  policy;  but  a  common 
defect  was  defeated  in  1895.  The  form  is  in  use,  and  the  statute  re- 
New  York  form  is  in  common  use.  quires  it  to  contain  certain  matters. 


167  IN   GENERAL.  §    203 

that  time,  but  it  is  still,  in  effect,  the  New  York  standard.  The  New 
York  form  has  been  generally  adopted  by  the  insurance  companies 
and  is  in  common  use  in  states  which  have  not  yet  adopted  a  standard 
form. 

§  203.  The  binding  clause. — All  the  states  which  require  the  use 
of  a  standard  form,  except  North  Carolina,  prescribe  penalties  for 
using  another  form,  and  all  but  New  York,  New  Hampshire  and 
North  Carolina  make  a  policy  issued  in  violation  of  the  law  binding 
on  the  company.  The  Massachusetts,  Ehode  Island  and  Utah  stat- 
utes prescribe  penalties  for  using  other  forms,  "but  said  policy  shall 
nevertheless  be  binding  on  the  company  using  the  same."  Minne- 
sota, North  Dakota  and  South  Dakota  also  provide, — "and  such 
company  shall  thereafter  be  disqualified  from  doing  business  in  the 
state." 

Although  the  legislature  requires  insurance  companies  to  use  the 
standard  form  and  provides  that  any  contracts  made  contrary  to  its 
provisions  shall  be  void,  liability  can  not  be  escaped  by  the  use  of  a 
form  which  in  some  slight  respect  departs  from  the  standard.  In 
Michigan  it  was  said  :7  "Contracts  of  insurance,  so  far  as  the  public 
are  concerned,  stand  upon  no  different  basis  than  other  contracts. 
The  object  was  to  protect  policy-holders,  and  to  provide  a  policy 
fair  to  the  insured  and  to  the  insurer  and  avoid  litigation.  It  was 
undoubtedly  well  known  to  the  legislature  that  policy-holders  do  not 
usually  examine  and  scrutinize  their  policies  with  the  same  care 
that  they  do  other  contracts  which  they  make  involving  their  or- 
dinary business  transactions.  The  statute  imposes  a  penalty  upon 
the  insurance  company  for  issuing  such  a  policy,  but  imposes  none 
on  the  insured.  In  using  the  word  Void/  the  legislature  certainly 
did  not  contemplate  that  an  insurance  company  might  insert  a  clause 
not  provided  for  in  the  standard  policy,  receive  premiums  year  after 
year  upon  it,  and,  when  the  loss  occurs,  say  to  the  insured,  'Your 
policy  is  void  because  we  inserted  a  clause  in  it  contrary  to  the  laws 
of  Michigan.'  Such  a  result  would  be  a  reproach  upon  the  legislature 
and  the  law.  The  law  so  construed,  instead  of  operating  to  protect 
the.  insured,  would  afford  the  surest  means  to  oppress  and  defraud 
them,  and  thus  defeat  the  very  object  the  legislature  had  in  view. 
This  statute  comes  clearly  within  that  class  of  cases  which  holds  the 
word  'void'  to  mean  voidable." 

7  Armstrong  v.  Western,  etc.,  Ins.  Co.,  95  Mich.  137  (1893). 


§    204  THE    STANDARD   POLICY.  168 

§  204.  Construction  of  the  standard  policy. — The  rule  for  the 
construction  of  the  contract  of  insurance  was  established  before 
the  compulsory  adoption  of  the  standard  form  of  policy.  The 
theory  is  that  as  the  policy  is  prepared  by  the  insurance  company  it 
should  be  strictly  construed  in  favor  of  the  insured.  When  there  is 
doubt  as  to  the  true  construction  to  be  given  to  the  language,  the  court 
should  lean  against  a  construction  which  would  limit  the  liability  of 
the  insurer.8  It  was  said  in  a  recent  case,  that  conditions  for  the 
forfeiture  of  an  insurance  policy  will  be  strictly  construed  against 
the  insurer,  where  it  retains  the  premium  and  seeks  by  such  condition 
to  escape  liability  after  loss  occurs.9  It  is  well  settled  that  written 
parts  of  the  contract  control  the  printed  parts  where  there  is  a  con- 
flict, but  this  is  also  subject  to  the  rule  that  words  of  exception  in 
an  insurance  policy,  if  doubtful,  are  to  be  construed  most  strictly 
against  the  party  for  whose  benefit  they  are  intended.10 

An  insurance  policy  is  an  original  independent  agreement  taking 
effect  from  its  date,  and  its  interpretation  is  not  to  be  controlled  or 
affected  by  prior  policies  of  which  it  is  technically  the  renewal.11 
The  standard  policy  is  a  statutory  law  as  well  as  a  contract,  and  its 
provisions  are  therefore  binding  upon  all  the  parties.  In  a  recent 
case  in  Michigan12  it  was  claimed  that  as  the  standard  policy  is  pre- 
scribed by  state  authority,  it  should  not  be  subject  to  the  rule  that 
such  contracts  are  to  be  construed  most  favorably  to  the  insured. 
The  question  was  not  determined,  as  it  was  said  that  the  terms  em- 
ployed in  the  policy  under  consideration  had  been  in  previous  use 
in  insurance  contracts  and  had  received  judicial  construction.  It 
is  to  be  presumed  that  the  terms  used  in  the  standard  policy  are 
used  in  the  sense  in  which  they  were  previously  used  and  defined. 
In  New  York  it  was  said:13  "The  policy,  although  of  the  standard 

8  Liverpool,  etc.,  Ins.  Co.  v.  Rear-  See  note  to  Lancaster  F.  Ins.  Co.  v. 
ney,  180  U.  S.  132  (1901);  Home  Ins.  Lenheim,   33   Am.  Rep.   783    (1879). 
Co.  v.  Feyerabend,  7  Kan.  App.  231,  10  Monroe,  etc.,  Assn.  v.  Liverpool, 
52   Pac.    899    (1898);    Georgia,    etc.,  etc.,   Ins.  Co.,  50  La.  Ann.  1243,  24 
Ins.   Co.  v.  Allen,   119   Ala.   436,   24  So.  238   (1898). 

So.   399    (1898).     A  contract  of  in-  "Temple  v.  Niagara  F.   Ins.   Co., 

surance    will,    if    possible,    be    con-  109  Wis.  372,  85  N.  W.  361    (1901). 

strued     to     prevent     a     forfeiture:  "John  Davis  &  Co.  v.  Insurance 

Bridges  v.  National  Union,  73  Minn.  Co.,    115    Mich.    382,    73    N.    W.    393 

486,  77  N.  W.  270,  409  (1898).  (1897). 

9  Canton   Ins.   Office  v.   Woodside,  "  Matthews  v.  American,  etc.,  Ins. 
90  Fed.  301,  33  C.  C.  A.  63    (1898).  Co.,  154  N.  Y.  449,  39  L.  R.  A.  433 


169  IN    GENERAL.  §    204 

form,  was  prepared  by'  the  insurers,  who  are  presumed  to  have  had 
their  own  interests  primarily  in  view ;  and  hence,  when  the  meaning  is 
doubtful  it  should  be  construed  most  favorably  to  the  insured,  who 
had  nothing  to  do  with  the  preparation  thereof.  Moreover,  when  a 
literal  construction  would  lead  to  a  manifest  injustice  to  the  insured, 
and  a  liberal  but  still  reasonable  construction  would  prevent  injustice 
by  not  requiring  an  impossibility,  the  latter  should  be  adopted,  because 
the  parties  are  presumed,  when  the  language  used  by  them  permits,  to 
have  intended  a  reasonable  and  not  an  unreasonable  result." 

In  another  recent  case,  commenting  upon  the  standard  policy,  the 
New  York  court  of  appeals  said:14  "The  act  providing  for  a  uni- 
form policy,  known  as  the  standard  policy,  and  which  makes  its  use 
compulsory  upon  insurance  companies,  marks  a  most  important  and 
useful  advance  in  legislation  relating  to  contracts  of  insurance.  The 
practice  which  prevailed  before  this  enactment,  whereby  each  company 
prescribed  the  form  of  its  contract,  led  to  great  diversity  in  the  pro- 
visions and  conditions  of  insurance  policies,  and  frequently  to  great 
abuse.  Parties  taking  insurance  were  often  misled  by  unusual  clauses 
or  obscure  phrases  concealed  in  a  mass  of  verbiage,  and  often  so 
printed  as  to  almost  elude  discovery.  Unconscionable  defenses,  based 
upon  such  conditions,  were  not  infrequent,  and  courts  seem  sometimes 
to  have  been  embarrassed  in  the  attempt  to  reconcile  the  claims  of 
justice  with  the  laws  of  contracts.  Under  the  law  of  1886,  com- 
panies are  not  permitted  to  insert  conditions  in  policies  at  their  will. 
The  policies  they  now  issue  must  be  unifrom  in  their  provisions,  ar- 
rangement and  type.  Persons  seeking  insurance  will  come  to  un- 
derstand to  a  greater  extent  than  heretofore  the  contract  into  which 
they  enter.  Now,  as  heretofore,  it  is  competent  for  the  parties  to 
a  contract  of  insurance,  by  agreement  in  writing  or  parol,  to  modify 
the  contract  after  the  policy  has  been  issued,  or  to  waive  conditions 
or  forfeitures.  The  power  of  agents,  as  expressed  in  the  policy,  may 
be  enlarged  by  usage  of  the  company,  its  course  of  business,  or  by  its 
consent,  express  or  implied.  The  principle  that  courts  lean  against 
forfeitures  is  unimpaired;  and  in  weighing  evidence  tending  to  show 
a  waiver  of  conditions  or  forfeitures,  the  court  may  take  into  con- 
sideration the  nature  of  the  particular  condition  in  question,  whether 

(1897);  Rickerson  v.  Hartford,  etc.,  14  Quinlan  v.  Providence,  etc.,  Ins. 

Ins.  Co.,   149  N.  Y.   307,   313    (1896)  Co.,    133    N.    Y.    356,    31    N.    E.    31 

(construing     Laws     1892,     ch.     69,  (1892). 
§  121). 


§    205  THE    STANDABD   POLICY.  170 

a  condition  precedent  to  any  liability,  or  one  relating  to  the  remedy 
merely,  after  a  loss  has  been  incurred.  But  where  the  restrictions 
upon  an  agent's  authority  appear  in  the  policy,  and  there  is  no  evi- 
dence tending  to  show  that  his  powers  have  been  enlarged,  there 
seems  to  be  no  good  reason  why  the  authority  expressed  should  not  be 
regarded  as  the  measure  of  his  power;  nor  is  there  any  reason  why 
courts  should  refuse  to  enforce  forfeitures  plainly  incurred  which 
have  not  been  expressly  or  impliedly  waived  by  the  company." 

§  205.  Effect  of  a  breach  of  condition. — The  decisions  are  con- 
flicting upon  the  question  of  the  effect  of  a  violation  of  a  condition 
in  a  fire  insurance  policy.  The  weight  of  authority  seems  to  support 
the  view  that  a  violation  of  a  condition  that  works  a  forfeiture  of  the 
policy  merely  suspends  the  insurance  during  the  violation,  and  if 
the  violation  is  discontinued  during  the  life  of  the  policy  and  does 
not  exist  at  the  time  of  the  loss,  the  policy  revives  and  the  company  is 
liable,  although  it  had  never  consented  to  the  violation  of  the  condi- 
tions in  the  policy,  and  such  violation  has  been  such  that  the  com- 
pany could,  had  it  known  of  it  at  the  time,  have  declared  a  for- 
feiture therefor.15  But  the  decisions  are  not  uniform;  and  a  num- 

18  As  sustaining  the  view  that  the  Dowell,  50  111.  120,  99  Am.  Dec.  497 

policy  is  merely  suspended,  see  (1869);  Insurance  Co.  v.  Garland, 

Born  v.  Home  Ins.  Co.,  110  Iowa  108  111.  220-226  (1883);  Traders' 

379,  81  N.  W.  676,  80  Am.  St.  300  Ins.  Co.  v.  Catlin,  163  111.  256,  45  N. 

(1900),  annotated,  where  many  of  E.  255  (1896);  Lounsbury  v.  Protec- 

the  following  cases  are  cited:  tion  Ins.  Co.,  8  Conn.  459  (1831); 

Breach  of  condition  as  to  mort-  Phoenix  Ins.  Co.  v.  Lawrence,  4 

gages:  State  Ins.  Co.  v.  Schreck,  Met.  (Ky.)  9,  81  Am.  Dec.  521 

27  Neb.  527,  20  Am.  St.  696,  43  N.  W.  (1862);  Joyce  v.  Maine  Ins.  Co.,  45 

340  (1889);  Omaha  F.  Ins.  Co.  v.  Me.  168,  71  Am.  Dec.  536  (1858); 

Dierks,  43  Neb.  473,  61  N.  W.  740  United  States,  etc.,  Ins.  Co.  v.  Kim- 

(1895);  Johansen  v.  Home  F.  Ins.  berly,  34  Md.  224,  6  Am.  Rep.  325 

Co.,  54  Neb.  548,  74  N.  W.  866  (1870);  Garrison  v.  Farmers',  etc., 

(1898);  Home  F.  Ins.  Co.  v.  Johan-  Ins.  Co.,  56  N.  J.  L.  235,  28  Atl.  8 

sen,  59  Neb.  349,  80  N.  W.  1047  (1893);  Cumberland  Valley  Mut. 

(1899);  Tompkins  v.  Hartford  F.  Protection  Co.  v.  Schell,  29  Pa.  St. 

Ins.  Co.,  22  App.  Div.  (N.  Y.)  380,  31  (1857);  Mutual  F.  Ins.  Co.  v. 

49  N.  Y.  Supp.  184  (1897).  Coatesville  Shoe  Factory,  80  Pa.  St. 

Breach  of  condition  as  to  use  of  407  (1876);  Krug  v.  German  F.  Ins. 

premises:  New  England,  etc.,  Ins.  Co.,  147  Pa.  St.  272,  30  Am.  St.  729, 

Co.  v.  Wetmore,  32  111.  221  (1863);  23  Atl.  572  (1892);  Hinckley  v.  Ger- 

Schmidt  v.  Peoria,  etc.,  Ins.  Co.,  41  mania  F.  Ins.  Co.,  140  Mass.  38,  54 

111.  295  (1866);  Insurance  Co.  v.  Me-  Am.  Rep.  445,  I  N.  E.  737  (1885); 


171 


IN   GENERAL. 


205 


ber  hold  that  upon  breach  of  a  condition  by  which  a  forfeiture  of 
the  insurance  may  be  declared,  the  policy  becomes  void  and  can  never 
be  restored  to  validity  except  with  the  consent  of  the  insurer.16  In 


Wilkins  v.  Tobacco  Ins.  Co.,  30  Ohio 
St.  317,  27  Am.  Rep.  455  (1876); 
Hennessey  v.  Manhattan  F.  Ins.  Co., 
28  Hun  (N.  Y.)  98  (1882);  Green- 
leaf  v.  St.  Louis  Ins.  Co.,  37  Mo.  25 
(1865). 

Breach  of  condition  as  to  other 
insurance:  New  England,  etc.,  Ins. 
Co.  v.  Schettler,  38  111.  167  (1865); 
Germania  F.  Ins.  Co.  v.  Klewer,  129 
111.  599  (1889);  Western  Assur.  Co. 
v.  Mason,  5  111.  App.  141  (1879); 
Phenix  Ins.  Co.  v.  Johnston,  42  111. 
App.  66  (1891);  Obermeyer  v.  Globe, 
etc.,  Ins.  Co.,  43  Mo.  573  (1869); 
Jacobs  v.  Equitable  Ins.  Co.,  19  U. 
C.  Q.  B.  250  (1860). 

Breach  of  condition  as  to  occu- 
pancy: Insurance  Co.  v.  Garland, 
108  111.  220  (1883);  Schuermann  v. 
Dwelling  House  Ins.  Co.,  57  111. 
App.  200  (1894);  Laselle  v.  Hoboken 
F.  Ins.  Co.,  43  N.  J.  L.  468  (1881); 
Ring  v.  Phoenix  Assur.  Co.,  145 
Mass.  426,  14  N.  E.  525  (1888); 
.-Etna  Ins.  Co.  v.  Meyers,  63  Ind. 
238  (1878);  Whitney  v.  Black  River 
Ins.  Co.,  72  N.  Y.  117,  28  Am.  Rep. 
116  (1878). 

By  temporary  alienation:  Power 
v.  Ocean  Ins.  Co.,  19  La.  28,  36  Am. 
Dec.  665  (1841);  Hitchcock  v. 
Northwestern  Ins.  Co.,  26  N.  Y.  b8 
(1862);  Lane  v.  Maine,  etc.,  Ins.  Co., 
12  Me.  44,  28  Am.  Dec.  150  (1835); 
Worthingham  v.  Bearse,  12  Allen 
(Mass.)  382,  90  Am.  Dec.  152 
(1866);  Shearman  v.  Niagara  F. 
Ins.  Co.,  46  N.  Y.  526,  7  Am.  Rep. 
380  (1871). 

16  As  to  mortgages:  German,  etc., 
Ins.  Co.  v.  Humphrey,  62  Ark.  348, 
54  Am.  St.  297,  35  S.  W.  428  (1896); 
Insurance  Co.  v.  Wicker,  93  Tex. 


390,  54  S.  W.  300,  55  S.  W.  740 
(1900). 

As  to  use  of  premises:  Fernandez 
v.  Great  Western  Ins.  Co.,  48  N.  Y. 
571,  8  Am.  Rep.  571  (1872);  Burgess 
v.  Equitable,  etc.,  Ins.  Co.,  126  Mass. 
70,  30  Am.  Rep.  654  (1878);  Carey 
v.  German,  etc.,  Ins.  Co.,  84  Wis.  80, 
36  Am.  St.  907,  54  N.  W.  18  (1893); 
Mead  v.  Northwestern  Ins.  Co.,  7  N. 
Y.  530  (1852);  Jennings  v.  Chenan- 
go  Ins.  Co.,  2  Den.  (N.  Y.)  75 
(1846);  Wheeler  v.  Traders'  Ins. 
Co.,  62  N.  H.  450,  13  Am.  St.  582 
(1883);  Kyte  v.  Commercial,  etc., 
Assur.  Co.,  149  Mass.  116,  21  N.  E. 
361  (1888);  Lyman  v.  State,  etc., 
Ins.  Co.,  14  Allen  (Mass.)  329 
(1867);  Hill  v.  Middlesex,  etc., 
Assur.  Co.,  174  Mass.  542,  55  N.  E. 
319  (1899);  Frost's,  etc.,  Works  v. 
Millers',  etc.,  Ins.  Co.,  37  Minn. 
300,  5  Am.  St.  846,  34  N.  W.  35 
(1887);  Imperial  F.  Ins.  Co.  v.  Coos 
County,  151  U.  S.  452,  14  Sup.  Ct. 
379  (1893). 

By  other  insurance:  Georgia 
Home  Ins.  Co.  v.  Rosenfield,  95  Fed. 
358  (1899);  Fabyan  v.  Union,  etc., 
Ins.  Co.,  33  N.  H.  203  (1856). 

As  to  vacancy:  Moore  v.  Phoenix 
Ins.  Co.,  62  N.  H.  240,  13  Am.  St. 
556  (1882);  East  Texas  F.  Ins.  Co. 
v.  Kempner,  87  Tex.  229,  47  Am.  St. 
99,  27  S.  W.  122  (1894). 

The  Michigan  policy  provides 
that  the  policy  shall  be  void  "if  a 
loss  shall  occur  on  the  property  in- 
sured while  such  breach  of  condi- 
tion continues  or  such  breach  of 
condition  is  the  primary  or  con- 
tributory cause  of  the  loss."  The 
New  Hampshire  statute  provides 
that  "a  change  in  the  property  in- 


§    206  THE    STANDARD    POLICY. 

some  states  the  insurance  company  is  required,  upon  notice  of  a 
breach  of  a  condition  in  the  policy,  to  take  some  affirmative  action  to 
show  that  it  does  not  intend  to  waive  the  forfeiture.17 

A.    PROVISIONS  KELATING  TO  MATTERS  BEFORE  Loss. 
I.    Formal  Part  of  Contract. 

The  -  -  Insurance  Company,  in  consideration  of  the  stipula- 
tions herein  named  and  of  dollars  premium,  does  insure 

-  for  the  term  of  -        -  from  the day  of ,  19 — , 

at  noon,  to  the  day  of  ,  19 — ,  at  noon,  against  all 

direct  loss  or  damage  by  fire,  except  as  herein  provided,  to  an  amount 
not  exceeding  —  -  dollars,  to  the  following  described  property 
while  located  and  contained  as  described  herein,  and  not  elsewhere, 
to  wit, .18 

v 

§  206.  Parties. — The  capacity  of  individuals  and  corporations  to 
become  parties  to  contracts  of  insurance  has  already  been  considered.19 
If  the  wrong  person  is  named  as  the  insured,  the  policy  may  be  re- 
formed in  equity.20  The  contract  is  personal,  and  refers  to  the  per- 
son, and  not  to  the  thing  out  of  which  the  interest  arises.21  Only 
the  interest  of  the  person  named  in  the  policy  is  covered  by  the  con- 

sured  or  in  its  use  or  occupation,  or  after  named,  the  receipt  whereof  is 

a  breach  of  any  of  the  terms  of  the  hereby    acknowledged,    does    insure 

policy  by  the  insured,  shall  not  af- and  -    -  legal  representatives 

feet    the    policy    except    while    the  against    loss    or    damage    by    fire, 

change  or  breach  continues."  to    the    amount    of    dollars. 

17  See  Alabama,  etc.,  Assur.  Co.  v.  (Description   of  property  insured.) 
Long,  etc.,  Co.,  123  Ala.  667,  26  So.  *     *     *     Said    property   is   insured 

655    (1899);    Appleton    Iron    Co.    v.     for  the  term  of ,  beginning  on 

British,  etc.,  Co.,  46  Wis.  23  (1879).     the day  of in  the  year 

18  This  form  has  been  followed  in  at  noon,   and   continuing  until  the 

the  standard  policies  of  New  York,          -  day  of  in  the  year  

New  Jersey,  Rhode  Island,  Connecti-  at  noon,  against  all  loss  or  damage 

cut,  Louisiana,  Iowa,  Michigan,  Wis-  by  fire  originating  from  any  cause 

consin,    South    Dakota,    North    Da-  except    *     *     *     " 

kota  and  North  Carolina.     The  fol-  w  §  10  et  seq.,  supra. 

lowing   is    found    in    the    standard  20  Spare  v.  Home,  etc.,  Ins.  Co.,  15 

policies    of    Massachusetts,    Minne-  Fed.  707,  19  Fed.  14  (1884). 

sota,   Maine   and   New   Hampshire:  21  Cummings  v.  Cheshire,  etc.,  Ins. 

"In    consideration    of    -      -    dollars  (Jo.,  55  N.  H.  457  (1875). 

to   it  paid   by  the   insured,   herein- 


173  FORMAL  PART  OF  CONTRACT.  §  206 

tract,  unless  some  form  of  words  is  used  to  express  the  contrary  in- 
tention. This  is  not  changed  by  an  oral  agreement  with  the  agent 
at  the  time  the  policy  is  issued  that  it  shall  also  cover  interests  of 
another  person.22  But  where  the  person  named  as  the  insured  knows 
that  the  company  issued  the  policy  under  a  mistaken  idea  that  another 
person  was  being  insured,  the  person  named  in  the  policy  is  not  pro- 
tected.23 The  mere  fact  that  the  name  of  the  insured  is  misspelled, 
as  Connor  for  O'Connor,  is  immaterial  where  the  identity  of  the  party 
is  fairly  shown.24  Eeference  to  the  interest  as  "his,"  where  the  in- 
sured is  a  woman,  is  immaterial.25  A  policy  procured  by  contractors 
issued  in  the  name  of  the  owner,  with  the  clause  "Contractors'  insur- 
ance for  thirty  days,"  covers  the  interest  of  the  contractors,  and  may 
be  enforced  for  their  benefit.26  An  unauthorized  change  of  the  name 
of  an  insured  party  will  not,  as  a  general  proposition,  affect  the 
rights  of  the  insured,  but  whenever  "the  insurer,  in  issuing  a  policy, 
deals  with  a  party  who  remains  in  possession  of  the  instrument  after 
execution,  and  is  alone  entitled  to  recover  the  amount  thereof  in 
case  of  loss,  he  is  authorized  to  assume  that  such  party  has  the  power 
to  consent  to  such  changes  in  it  before  breach  as  will  inure  to  the 
benefit  of  the  insured  and  tend  to  perfect  the  validity  of  the  con- 
tract."27 In  this  case  the  alteration  neither  injuriously  affected  the 
right  of  enforcing  the  policy  nor  changed  the  disposition  of  the 
money  collectible  thereon. 

The  name  of  the  party  insured  is  sometimes  omitted  from  the 
policy  and  a  general  phrase,  such  as  "for  the  account  of  whom  it  may 
concern,"  is  used.  So  the  insured  is  often  described  as  agent,  execu- 
tor or  trustee.  The  right  of  an  appointee  under  a  policy  payable  to 
him  as  his  interest  may  appear  is  not  an  independent  right  on  which 
such  person  is  entitled  to  sue,  but  is  a  mere  right  to  receive  the  whole 
or  part  of  the  money  to  which  the  insured  may  be  entitled,  and  hence 
such  a  provision  does  not  effect  the  insurer's  discharge  for  breach 
of  condition  by  the  assured.28 

22  Fuller   v.    Phoenix    Ins.    Co.,    61  28  German   F.   Ins.   Co.   v.   Thomp- 
lowa  350  (1883).  son,  43  Kan.  567,  23  Pac.  608  (1890). 

23  Travis  v.   Peabody   Ins.   Co.,   28  "  Martin  v.  Tradesmen's  Ins.  Co., 
W.  Va.  583  (1886).  101  N.  Y.  498  (1886). 

24  Hibernia  Ins.  Co.  v.  O'Connor,  29  »  Wunderlich  v.   Palatine  F.   Ins. 
Mich.  241  (1874);  Clark  v.  German,  Co.,    104    Wis.    395,    80    N.    W.    471 
etc.,  Ins.  Co.,  7  Mo.  App.  77   (1879).  (1899). 

28  Simon    v.    Home    Ins.    Co.,    58 
Mich.  278  (1885). 


§    207  THE    STANDARD    POLICY.  174 

§  207.  The  premium. — The  standard  form  provides  that  the 
amount  of  the  premium  shall  be  stated  in  the  written  contract.  The 
necessity  for  the  payment  of  this  amount  and  the  facts  which  con- 
stitute a  waiver  thereof  have  been  already  considered.29 

§  208.  Term  of  insurance. — The  standard  form  contemplates  that 
dates  which  limit  the  term  shall  be  inserted,  but  where  this  is  not 
done,  the  insurance  is  nevertheless  good  for  a  reasonable  time,  and 
the  burden  is  on  the  company  to  show  that  the  policy  was  not  in 
force  at  the  time  of  the  fire.30  It  may  be  shown  by  oral  evidence 
that  the  policy  was  to  take  effect  at  a  time  other  than  its  date.31  The 
insurance  begins  when  the  policy  is  applied  for  and  dated,  although 
it  is  not  delivered  for  some  days  thereafter.32  The-parties  may  agree 
that  the  termination  of  the  insurance  shall  be  at  the  option  of  the 
insured,  and  leave  the  date  blank.33  So,  a  contract  may  be  given  a 
retrospective  operation  and  be  made  to  cover  property  at  a  distance, 
although  it  has  already  been  destroyed,  where  neither  party  has 
knowledge  of  the  fact.34  A  policy  "from  the  14th  day  of  February, 
1868,  until  the  14th  day  of  August,  1868,"  was  held  to  cover  a  loss 
which  occurred  on  the  14th  day  of  August.35  In  the  absence  of  an 
invariable  custom  to  the  contrary,  a  contract  does  not  expire  until 
midnight  of  the  last  day  named.86  The  period  may  be  limited  by 
some  other  part  of  the  policy.  Thus,  the  policy  covered  a  "frame 
shingle-roof  hop  house"  while  drying  hops  "from  loss  or  damage  by 
fire  to  the  property  so  specified  from  the  15th  day  of  October,  1875." 
Within  the  term,  but  after  the  insured  had  ceased  drying  hops,  a  fire 
occurred,  and  it  was  held  that  the  company  was  not  liable  for  dam- 
ages caused  thereby.87  The  party  alleging  a  change  in  the  date  of 
the  expiration  of  the  policy  after  it  was  issued  has  the  burden  of 
proof.88 

29  See  §  127,  supra.  tucky,  etc.,  Ins.  Co.,  7  Bush    (Ky.) 

""Schroeder  v.  Trade  Ins.  Co.,  109  81  (1869). 

111.157  (1883).  » Isaacs  v.  Royal   Ins.  Co.,  L.  R. 

a  Atlantic  Ins.  Co.  v.  Goodall,  35  5  Exch.  296  (1870). 

N.  H.  328  (1857).  M  Herald   Co.   v.   Northern   Assur. 

32  Hubbard  v.  Hartford  F.  Ins.  Co.,  Co.,    4    Mont.    L.    Rep.    (Can.)    254 
33  Iowa  325  (1871).  (1888). 

33  Imboden    v.    Detroit,    etc.,    Ins.  ^  Langworthy     v.     Oswego,     etc., 
Co.,  31  Mo.  App.  321  (1888).  Ins.  Co.,  85  N.  Y.  632  (1881). 

"Security    F.    Ins.    Co.    v.    Ken-        M  Insurance  Co.  v.  Brim,  111  Ind. 

281,  12  N.  E.  315   (1887). 


175  FORMAL  PART  OF  CONTRACT.  §  209 

§  209.  The  amount. — There  are  but  few  opportunities  for  con- 
troversy as  to  the  maximum  amount  of  insurance,  as  this  clearly 
appears  in  the  policy.  The  measure  of  damages  under  special  pro- 
visions of  the  contract  and  the  valued-policy  laws  of  the  different 
states  will  be  referred  to  elsewhere.  If  the  policy  is  valued,  the  full 
amount  named  therein  is  recoverable  in  event  of  a  total  loss.  This 
may  result  by  force  of  a  statutory  provision,  or  from  the  express  lan- 
guage of  the  policy  in  the  absence  of  such  a  statute. 

§  210.  Description  of  the  property — In  general. — The  object  of 
the  descriptive  clause  is  the  identification  of  the  property,  and  where 
this  is  clear  parts  which  are  false  or  erroneous  may  be  disregarded.30 
Thus,  where  the  property  is  erroneously  described  as  a  building  of 
three  stories  instead  of  one  and  a  half  stories,  it  is  sufficient  if  the 
building  is  identified  by  reference  to  the  street  and  number  so  that 
the  company  can  not  have  been  misled.40  Any  ambiguity  in  the 
description  written  in  the  policy  will  be  construed  liberally  in  favor 
of  the  insured.  It  will  cover  not  only  what  is  specifically  enumerated, 
but  also  what  is  necessarily  appurtenant  thereto.41 

§  211.  Goods  held  in  trust. — The  word  trust  in  this  connection  is 
to  be  given  its  ordinary  popular  and  not  its  technical  meaning.42 
Property  described  as  "his  own  or  held  in  trust"  covers  a  piano  left 
for  sale  or  rent.43  A  policy  "on  his  goods,  stock  in  trade,  etc., 
whether  on  commission  or  held  in  trust,"  covers  goods  in  store  or 
on  joint  account  and  sold  for  mutual  profit  of  the  insured  and  an- 
other party.44  "The  property  of  the  insured  or  held  in  trust"  in- 
cludes cloth  left  with  the  insured  to  be  manufactured  into  clothing.45 
So,  an  insurance  on  "merchandise  generally  and  without  exception 
either  owned  or  held  in  trust,  or  on  consignment  in  the  warehouse 
of  a  commission  or  forwarding  merchant,"  covers  household  furni- 

38  Hatch  v.  New  Zealand  Ins.  Co.,  "Phoenix  Ins.  Co.  v.  Favorite,  49 

67  Cal.  122  (1885).  111.  259   (1868). 

40  Massell  v.   Protective,  etc.,   Ins.  43  Snow     v.     Carr,     61     Ala.     363 

Co.,  19  R.  I.  565,  35  Atl.  209   (1896).  (1878). 

"•  Buchanan  v.   Exchange  F.   Ins.  **  Millaudon  v.  Atlantic  Ins.  Co.,  8 

Co.,  61  N.  Y.  26  (1874);  Lovewell  v.  La.  561   (1834). 

Westchester  F.   Ins.  Co.,  124  Mass.  «  Stillwell  v.  Staples,  19  N.  Y.  401 

418,  26  Am.  Rep.  671   (1878);   Han-  (1859). 
nan  v.  Williamsburgh,  etc.,  Ins.  Co., 
81  Mich.  556  (1890). 


§    212  THE   STANDARD   POLICY.  176 

ture  and  wearing  apparel  and  books  received  and  held  on  deposit  sub- 
ject to  the  order  of  the  owner.46 

§  212.  May  cover  shifting  stock. — A  policy  upon  a  stock  of  goods 
covers  as  well  additions  made  from  time  to  time  after  the  insurance 
was  effected  as  those  on  hand  when  the  policy  was  issued.47  So,  in- 
surance upon  merchandise  in  a  store  covers  the  stock  as  diminished 
and  increased  from  time  to  time  in  the  ordinary  course  of  business.48 
As  said  in  one  case,49  "Any  other  construction  of  a  policy  of  insurance 
upon  a  stock  in  trade  continually  changing  would  render  it  worthless 
as  an  indemnity.  It  is  a  primary  principle  in  the  construction  of 
the  contract  of  insurance  to  give  it  effect  as  an  indemnity  which  the 
parties  to  it  designed."  Thus,  it  was  held  that  a  policy  on  a  stock 
of  goods  in  a  saloon  which  was  being  operated  at  the  time  the  policy 
was  issued  covers  newly  purchased  goods  of  the  same  character,  not 
exceeding  in  value  the  amount  insured.50 

§  213.  Ambiguous  descriptions — Reformation. — Where  a  misde- 
scription  of  the  property  insured  in  a  policy  occurred  through  the  mu- 
tual mistake  of  the  parties,  the  policy  may  be  reformed  in  equity  ;51  but 
where  a  party  accepts  a  policy  without  objection  and  makes  no  at- 
tempt to  have  the  description  corrected,  he  can  not  recover  if  the  de- 
scription can  not  be  applied  to  the  property  destroyed.52  Parol  evi- 
dence is  admissible  to  establish  the  identity  and  extent  of  the  prop- 
erty covered  by  the  policy  of  insurance  and  to  explain  any  latent  am- 
biguity in  the  description,53  but  a  party  can  not  by  such  evidence  es- 

w  Siter  v.   Morrs,   13   Pa.   St.   218  "9  Hooper  v.  Hudson  River  F.  Ins. 

(1850).  Co.,  17  N.  Y.  424  (1858). 

"American,  etc.,  Ins.  Co.  v.  Roth-  ^  Manchester  P.  Assur.  Co.  v.  Fei- 

child,  82  111.  166  (1876).  belman,    118    Ala.    308,    23    So.    759 

48Peoria,  etc.,  Ins.  Co.  v.  Anapow,  (1897). 

51   111.   283    (1869);    American,   etc.,  B1  Carey    v.     Home     Ins.     Co.,     97 

Ins.    Co.    v.    Rothchild,    82    111.    166  Iowa  619,  66  N.  W.  920  (1896). 

(1876);    Planters'   Mut.   Ins.   Co.   v.  M  Goddard  v.  Monitor  Ins.  Co.,  108 

Engle,  52  Md.  468  (1879);  Kunzze  v.  Mass.  56  (1871). 

American,   etc.,   Ins.   Co.,   41   N.   Y.  M  Storer  v.  Elliot  F.  Ins.  Co.,  45 

412    (1869);    Sharpless  v.   Hartford  Me.  175  (1858);  Bowman  v.  Agricul- 

F.  Ins.  Co.,  140  Pa.  St.  437   (1891);  tural  Ins.  Co.,  59  N.  Y.  521  (1875); 

American,    etc.,    Ins.    Co.    v.    Roth-  Snow  v.  Carr,  61  Ala.  363    (1878); 

child,  82  111.  166  (1876).  Wheeler  v.  Traders'  Ins.  Co.,  62  N. 

H.  326  (1882). 


177  FORMAL  PART  OF  CONTRACT.  §  213 

tablish  a  new  and  different  contract.54  Thus,  a  contract  relating  to 
one  subject  can  not  be  turned  into  a  contract  for  a  different  subject 
by  evidence  that  the  agent  of  the  company  by  mistake  described  the 
wrong  property/5  nor  can  a  policy  which  in  plain  terms  describes 
certain  property  be  varied  by  parol  evidence  so  as  to  show  that  only  a 
particular  interest  was  to  be  insured.56  As  a  general  proposition, 
there  can  be  no  recovery  for  property  not  described  in  the  policy,  un- 
less it  is  shown  that  there  was  a  mutual  mistake  or  that  the  company 
is  estopped  to  deny  that  the,  property  claimed  to  be  covered  was  not 
in  fact  that  which  is  described  in  the»policy.57 

Where  it  was  contended  that  the  policy  covered  only  the  warehouse 
company's  interest  in  the  goods  contained  in  the  warehouse,  the  Su- 
preme Court  of  the  United  States  said:58  "Blanket  or  floating  pol- 
icies are  sometimes  issued  to  factors  or  to  warehousemen,  intended  only 
to  cover  margins  uninsured  by  other  policies,  or  to  cover  nothing  more 
than  the  limited  interest  which  a  factor  or  warehouseman  may  have  in 
the  property  which  he  has  in  charge.  In  those  cases,  as  in  all  others, 
the  subject  of  the  insurance,  its  nature,  and  its  extent  are  to  be  ascer- 
tained from  the  words  of  the  contract  which  the  parties  have  made. 
It  is  as  true  of  policies  of  insurance  as  it  is  of  other  contracts,  that, 
except  when  the  language  is  ambiguous,  the  intention  of  the  parties 
is  to  be  gathered  from  the  policies  alone.  There  are  cases  in  which 
resort  may  be  had  to  parol  evidence  to  ascertain  the  subject  insured ; 
but  they  are  cases  of  latent  ambiguity.  *  *  *  It  is  no  exception 
to  the  rule  that  when  a  policy  is  taken  out  expressly  'for  or  on  ac- 
count of  the  owner'  of  the  subject  insured,  or  'on  account  of  whom- 
soever it  may  concern,'  evidence  beyond  the  policy  is  received  to  show 
who  are  the  owners  or  who  were  intended  to  be  insured  thereby.  In 
such  cases  the  words  of  the  policy  fail  to  designate  the  real  party  to 
the  contract,  and,  therefore,  unless  resort  is  had  to  extrinsic  evidence, 
there  it  no  contract  at  all.  Turning,  then,  to  the  contract  issued  to 
the  plaintiff  below  and  construing  it  by  the  language  used  and  the  in- 
tention of  the  parties  as  plainly  exhibited.  Its  words  are,  'The 
Home  Insurance  Company  insure  Baltimore  Warehouse  Company 

54  Holmes  v.  Charlestown,  etc.,  Ins.  etc.,  Co.,  89  Tenn.  1,  14  S.  W.  317 

Co.,  10  Mete.  (Mass.)  211  (1845).  (1890). 

60  Sanders  v.  Cooper,  115  N.  Y.  279,  °7  Martin  v.  Farmers'  Ins.  Co.,  84 

22  N.  E.  212   (sub  nom.  Landers  v.  Iowa  516,  51  N.  W.  29  (1892). 

Cooper),  5  L.  R.  A.  638  (1889).  B8  Home     Ins.     Co.     v.     Baltimore 

"Lancaster   Mills   v.    Merchants',  Warehouse  Co.,  93  U.  S.  527  (1876). 
12 — ELLIOTT  INS. 


§    214  THE   STANDARD   POLICY.  178 

against  loss  or  damage  by  fire  to  the  amount  of  $20,000,  on  merchan- 
dise hazardous  or  extra  hazardous,  their  own  or  held  by  them  in 
trust,  or  in  which  they  have  an  interest  or  liability,  contained  in'  a 
certain  described  warehouse.  There  is  nothing  ambiguous  in  this 
description  of  the  subject  insured.  It  is  as  broad  as  possible.  The 
subject  was  merchandise  stored  or  contained  in  a  warehouse.  It  was 
not  merely  an  interest  in  that  merchandise."  The  court  further  said : 
"The  parties  to  whom  the  policy  was  issued  were  warehouse  keepers, 
receiving  from  various  persons  cotton  and  other  merchandise  on  de- 
posit. They  were  empowered  by  their  charter  to  receive  bailments 
and  to  make  charges  against  the  bailors  for  handling,  labor  and  cus- 
tody. They  were  also  authorized  to  make  advances  upon  the  goods  de- 
posited with  them,  and  their  charges,  expenses,  advances,  and  commis- 
sions were  made  liens  on  the  property.  They  had,  therefore,  an  inter- 
est in  the  merchandise  deposited  with  them,  which  they  might  have 
caused  to  be  specifically  insured.  It  was  also  at  their  option  to  obtain 
insurance  upon  the  entire  interest  in  the  merchandise,  whether  held  by 
them  or  by  the  depositors.  Nothing  in  their  charter  forbids  such  in- 
surance. It  is  undoubtedly  the  law  that  wharfingers,  warehousemen 
and  commission  merchants,  having  goods  in  their  possession,  may  in- 
sure them  in  their  own  names,  and  in  case  of  loss  may  recover  the  full 
amount  of  insurance,  for  the  satisfaction  of  their  own  claims  first,  and 
hold  the  residue  for  the  owners.  Such  insurance  is  not  unusual,  even 
when  not  ordered  by  the  owners  of  the  goods,  and  when  so  made  it 
inures  to  their  benefit.  And  such  insurance,  we  must  hold,  the  ware- 
house company  sought  and  obtained  by  the  policy  of  the  plaintiff  in 
error.  The  words  'merchandise  held  in  trust'  aptly  describe  the 
property  of  the  depositors.  The  warehouse  company  held  the  mer- 
chandise in  trust  for  their  customers, — not,  it  is  true,  as  technical 
trustees,  but  as  trustees  in  the  sense  that  the  goods  had  been  intrusted 
to  them." 

§  214.  Presumption  as  to  nature  of  business. — An  insurance  com- 
pany is  presumed  to  know  the  nature  of  the  goods  ordinarily  kept  by 
those  engaged  in  a  certain  business,59  and  to  have  this,  as  well  as  the 
usual  methods  of  carrying  on  the  business,  in  mind  when  it  issues  the 
policy.60  So,  an  agent  of  the  company  is  presumed  to  be  familiar 

"Hall  v.  Insurance  Co.,  58  N.  Y.  N.  H.  326,  415  (1882),  citing  au- 
292  (1874).  thorities. 

••Wheeler  v.  Traders'  Ins.  Co.,  62 


179  FORMAL  PART  OF  CONTRACT.  §  215 

with  the  construction  of  the  building  insured  and  the  company  is 
charged  with  such  knowledge.61 

§  215.  Descriptions,  when  warranties. — Whether  descriptions  of 
the  character  and  use  of  the  insured  property  constitute  a  warranty 
will  depend  on  the  language  of  the  contract.  Unless  the  contrary  in- 
tention clearly  appears,  the  word  "dwelling'''  in  a  policy  will  be  con- 
strued as  descriptive  of  the  property,  and  not  as  a  warranty  that  the 
building  is  then  being  occupied  as  a  dwelling  house.62  So,  a  descrip- 
tion of  the  property  as  a  brick  building  is  not  a  warranty  that  it  is 
entirely  constructed  of  brick.63  Describing  a  building  as  a  storehouse 
is  not  a  warranty  that  it  shall  be  used  for  no  other  purpose.64  On  the 
contrary,  however,  it  has  been  held  that  a  misdescription  in  a  material 
respect  is  a  breach  of  warranty  without  reference  to  the  intention  of 
the  parties,65  and  that  description  of  the  use  and  occupation  is  a  war- 
ranty.66 Merely  describing  a  house  as  a  dwelling  is  not  a  warranty 
that  it  is  occupied  as  such.67  So,  a  statement  that  the  building  in- 
sured is  used  for  the  storage  of  ice  is  not  a  warranty  that  ice  was  stored 
there  when  the  policy  was  issued.68 

§  216.  Description  of  merchandise — What  included  in  the  descrip- 
tion.— There  are  many  cases  from  which  we  may  determine  what  is  in- 
cluded within  particular  descriptions.  Thus,  a  policy  on  "a  stock 
manufactured  or  in  the  process  of  manufacture"  is  held  to  cover  un- 
manufactured stock.69  A  policy  on  "merchandise,"  such  as  is  usually 
kept  in  country  stores,  covers  hardware,  china,  glassware,  etc.,  if  such 
articles  are  commonly  kept  in  such  places.70  A  policy  on  a  stock  of 

81  Pettit  v.  State  Ins.  Co.,  41  Minn.  M  Texas  Ins.  Co.  v.  Stone,  49  Tex. 
299,  43  N.  W.  378  (1889).  4  (1878);  Franklin  F.  Ins.  Co.  v. 

62  Niagara  F.  Ins.  Co.  v.  Johnson,     Martin,  40  N.  J.  L.  568  (1878). 

4  Kan.  App.  16,  45  Pac.  789   (1896).  67  Browning  v.  Home  Ins.  Co.,  71 

Contra,  Merwin  v.  Star  F.  Ins.  Co.,  N.  Y.  508   (1877).     But  see  Boyd  v. 

72   N.  Y.   603,   7   Hun    (N.  Y.)    659  Insurance  Co.,  90  Tenn.  212,  16  S. 

(1878).  W.  470   (1891). 

63  Gerhauser  v.  North  British,  etc.,  68  Dolliver  v.  St.  Joseph,  etc.,  Ins. 
Ins.  Co.,  7  Nev.  174  (1871).  Co.,  131  Mass.  39  (1881). 

64  Franklin  F.   Ins.   Co.  v.   Brock,  w  Spratley  v.  Hartford  Ins.  Co.,  1 
57  Pa.  St.  74  (1868).  Dillon   (C.  C.)  392   (1870). 

66  Tesson  v.  Atlantic,  etc.,  Ins.  Co.,  7°  Franklin  F.  Ins.  Co.  v.  Upde- 
40  Mo.  33  (1867).  graff,  43  Pa.  St.  350  (1862). 


§    216  THE   STANDARD   POLICY.  180 

clothing,  manufactured  or  in  the  process  of  manufacture,  which  con- 
tains a  provision  excluding  liability  "for  loss  for  property  owned 
by  another  party"  does  not  include  clothing  belonging  to  another 
person  taken  to  be  manufactured  under  a  contract  by  which  it  was 
to  be  at  the  manufacturer's  risk.71  A  policy  "on  their*stock  of  watches, 
watch  trimmings,  etc.,"  covers  the  entire  stock,  including  plate,  sil- 
verware, tools  of  the  trade  and  such  other  goods  as  form  part  of 
similar  stocks  in  the  same  city.72  The  words  "stock  in  trade,"  as 
applied  to  the  business  of  a  baker,  have  a  more  extended  meaning  than 
when  applied  to  the  business  of  a  merchant,  and  cover  tools  and 
implements  necessary  for  the  carrying  on  of  the  business,  including 
a  horse  and  cart.73  Where  the  policy  covered  "rags  and  old  metals," 
it  was  held  that  evidence  was  admissible  to  show  that  by  the  usage  of 
the  trade  the  terms  had  acquired  a  broader  signification  than  applied 
to  those  words  as  commonly  used.74  Underwriters  insuring  by  cer- 
tain words  may  fairly  be  presumed  to  know  the  mercantile  meaning 
of  these  words,  and  the  fact  of  a  widespread  established  use  has  at 
least  a  tendency  to  show  that  they  had  such  knowledge.  A  policy 
upon  a  stock  of  "hair,  wrought  and  in  process,  as  a  retail  hair  store," 
does  not  cover  fancy  goods  made  of  other  materials,  although  usually 
kept  and  sold  in  a  retail  hair  store.75  Insurance  on  jewelry  and 
clothing  constituting  a  stock  in  trade  does  not  include  such  articles 
as  musical  instruments,  surgical  instruments,  guns  and  books.76  A 
policy  on  "English,  American  and  West  India  goods"  does  not  in- 
clude teas  and  nutmegs.77  Insurance  on  "a  wholesale  stock  of  drugs, 
paints,  oils  and  dyestuffs  and  other  goods  not  more  hazardous,  while 
contained  in  the  three-story  brick  building,"  covers  the  entire  stock 
of  goods  contained  in  such  building.78  A  policy  which  insures  the 
party  as  "a  manufacturer  of  brass  clockworks"  covers  all  the  articles 
ordinarily  employed  in  such  manufacture,  although  the  keeping  and 
use  of  certain  articles  is  prohibited  by  the  printed  terms  of  the  pol- 

n  Getchell  v.  ^Etna  Ins.  Co.,  14  75  Medina  v.  Builders',  etc.,  Ins. 

Allen  (Mass.)  325  (1867).  Co.,  120  Mass.  225  (1876). 

"  Crosby  v.  Franklin  Ins.  Co.,  5  7>i  Rafel  v.  Nashville,  etc.,  Ins.  Co., 

Gray  (Mass.)  504  (1855).  7  La.  Ann.  244  (1852). 

73  Moadinger  v.  Mechanics'  F.  Ins.  77  Huckins    v.    People's,    etc.,    Ins. 
Co.,  2  Hall  (N.  Y.)  490  (1829).  Co.,  11  Fost.  (N.  H.)  238  (1855). 

74  Mooney  v.  Howard  Ins.  Co.,  138  78  Wilson     Drug    Co.    v.     Phoenix 
Mass.  375,  52  Am.  Rep.  377  (1885).  Assur.  Co.,  110  N.  C.  350,  14  S.  E. 

790   (1892). 


181  FORMAL  PART  OF  CONTRACT.  §  216 

icy.79  So,  a  policy  on  "all  the  articles  making  up  the  stock  of  a  pork 
house  and  all  within  the  building  and  appurtenant  thereto,"  covers 
whatever  belongs  to  the  stock  without  reference  to  ownership  of  par- 
ticular articles,  notwithstanding  the  fact  that  there  is  a  provision 
in  the  policy  requiring  goods  on  commission  to  be  insured  as  such.80 
A  policy  insuring  a  railroad  company  on  its  wood  and  logs  cut  and 
piled  along  its  line  does  not  cover  property  belonging  to  other  parties 
which  is  destroyed  by  sparks  from  the  company's  locomotives  and 
for  which  it  is  responsible  in  damages.81  The  word  "guano"  includes 
fertilizer.82  Whether  flax  is  included  in  the  term  grain  is  for  the 
jury  to  determine.83  A  policy  on  "freight  cars  owned  or  used  by  a 
.railroad  company"  protects  the  cars  of  another  road  while  in  the 
possession  of  and  used  by  the  insured.84  The  word  "machinery"  in- 
cludes all  instruments  intended  to  be  operated  exclusively  by  ma- 
chinery in  the  business  of  the  insured  which  are  so  used  from  time 
to  time  in  the  regular  and  ordinary  prosecution  of  the  business  re- 
ferred to  in  the  policy,  and  covers  movable  dies  worked  by  a  press, 
which,  when  not  in  use,  were  deposited  and  kept  on  shelves.85  Where 
the  insured  is  permitted  to  occupy  a  portion  of  a  warehouse  for  the 
purpose  of  rehandling  tobacco,  he  may,  on  the  destruction  of  the 
premises  by  fire,  recover  for  the  tobacco  which  was  on  hand  and  for 
sale.86  A  policy  on  a  creamery  building  and  merchandise,  which  con- 
sisted chiefly  of  butter  and  cheese,  manufactured  and  in  the  process 
of  manufacture,  covers  milk  cans  used  in  the  business.87  Millet  hay  is 
included  in  an  insurance  policy  on  "grain."88  Carpets  and  bed  cloth- 
ing are  covered  by  the  term  "household  furniture."89  Stationery  and 
boxes  of  a  glove  manufacturer  are  not  included  in  the  term  "all  other 
kinds  of  implements."90  A  policy  on  "live  stock"  covers  a  horse 

79  Bryant  v.  Poughkeepsie,  etc.,  M  Seavey  v.  Central,  etc.,  Ins.  Co., 

Ins.  Co.,  17  N.  Y.  200  (1858).  Ill  Mass.  540  (1873). 

"ojEtna  Ins.  Co.  v.  Jackson,  16  B.  ^  Western  Assur.  Co.  v.  Ray,  20 

Mon.  (Ky.)  242  (1855).  Ky.  L.  1360,  49  S.  W.  326  (1899). 

81  Monadnock  R.   Co.   v.   Manufac-  "  Cronin  v.  Fire  Ass'n,  112  Mich. 
turers1  Ins.  Co.,  113  Mass.  77  (1873).  106,  70  N.  W.  448  (1897). 

82  Planters',  etc.,  Ins.  Co.  v.  Engle,  M  Norris  v.  Farmers',  etc.,  Ins.  Co., 
52  Md.  468  (1879).  65  Mo.  App.  632  (1896). 

83  Hewitt  v.  Watertown  F.  Ins.  Co.,  89  Patrons',   etc.,   Soc.   v.   Hall,    19 
55  Iowa  323  (1880).  Ind.  App.  118,  49  N.  E.  279   (1898). 

84  Commonwealth     v.     Hide,     etc.,  M  Stemmer  v.   Scottish,   etc.,   Ins. 
Ins.  Co.,  112  Mass.  136  (1873).  Co.,  33  Ore.  65,  49  Pac.  588,  53  Pac. 

498   (1898). 


§    216  THE    STANDARD    POLICY.  182 

acquired  after  the  date  of  the  policy.91  A  policy  on  the  machinery  of 
a  paper  mill  was  held  to  cover  all  machinery,  tools  and  implements 
used  in  connection  therewith  in  the  manufacture  of  paper.92  A  policy 
on  tools  used  "in  the  manufacture  of  boots  and  shoes"  includes  pat- 
terns for  making  tools.93  A  policy  on  eggs  "in  pickle"  covers  the  eggs 
at  any  time  while  in  store  undergoing  the  process  of  pickling.9*  The 
insured  were  manufacturers  of  machinery,  parts  of  which  were  made 
of  cast  iron,  and  the  policy  covered  "their  fixed  and  movable  machin- 
ery, engines,  lathes  and  tools."  They  were  obliged  to  keep  themselves 
supplied  with  wooden  patterns  in  order  to  make  the  iron  castings 
necessary  to  the  completion  of  their  machinery,  and  their  practice  was 
to  send  these  patterns  to  various  foundries  from  which  they  pro- 
cured castings.  It  was  held  that  it  could  not  be  shown  by  parol  evi- 
dence that  the  parties  intended  to  include  patterns  under  the  general 
term  of  tools.  The  court  said:  "The  usual  meaning  of  the  word 
'too?  is  an  instrument  of  manual  operation — that  is,  an  instrument 
to  be  used  and  managed  by  hand  instead  of  being  moved  and  con- 
trolled by  machinery.  We  see  no  grounds  for  holding  that  these 
patterns  are  machines  or  parts  of  machines.  As  we  understand  the 
case  presented,  they,  or  some  of  them  at  least,  were  not  raised  or 
lowered  by  machinery,  but  were  of  such  size  and  shape  that  they  were 
applied  and  removed  by  hand.  *  *  *  We  think,  therefore,  that, 
without  doing  any  violence  to  the  language  of  the  policy,  it  may  be 
interpreted  as  covering  all  patterns  which  from  their  size  and  shape 
admitted  of  being  applied  and  managed  by  the  hands  of  one  man/'95 
A  policy  covered  "merchandise  in  a  store  and  furniture  and  fixtures 
in  a  building"  to  be  used  by  the  assured  as  a  "fancy  goods  and  Yankee 
notion  store."  It  contained  provisions  against  certain  hazardous  and 
extra  hazardous  articles,  but  plaintiff  was  permitted  to  show  that 
fireworks  and  firecrackers  constituted  an  ordinary,  usual,  and  recog- 
nized portion  of  a  stock  of  fancy  goods  and  Yankee  notions,  and  were 
therefore  covered  by  the  policy.96  A  policy  "on  a  stock  in  trade,  being 
mostly  chamber  furniture  in  sets  and  other  articles  usually  kept  by 

81  Mills   v.    Farmers'    Ins.    Co.,    37  94  Hall  v.  Concordia  F.  Ins.  Co.,  90 

Iowa  400  (1873).  Mich.  403,  51  N.  W.  524  (1892). 

8i  Buchanan  v.   Exchange   F.   Ins.  95Lovewell  v.  Westchester  F.  Ins. 

Co.,  61  N.  Y.  26  (1874).  Co.,  124  Mass.  418,  26  Am.  Rep.  671 

03  Adams  v.   New  York,   etc.,   Ins.  (1878). 

Co.,    85    Iowa    6,    51    N.    W.    1149  OJ  Barnum    v.    Merchants'    F.    Ins. 

(1892).  Co.,  97  N.  Y.  188   (1884). 


183  FORMAL  PART  OF  CONTRACT.  §  217 

furniture  dealers/'  based  on  an  application  which  is  made  a  part  of  the 
contract,  which  described  it  as  "household  furniture,  being  my  stock 
in  trade,  mostly  chamber  furniture  in  sets,"  covers  paints  and  var- 
nishes used  in  finishing  furniture,  although  applicant,  in  answer  to 
the  question  as  to  whether  any  highly  inflammable  matter  was  kept 
in  or  on  the  premises,  answered  "Not  to  my  knowledge."97  A  policy 
on  a  stock  of  "paints,  oils,  brushes,  blinds,  and  such  other  merchandise 
while  contained  in  the  second  story  of  the  frame  building,  etc.,"  was 
held  to  cover  such  articles  as  set  tackle  and  fall,  ropes,  knives,  cans, 
scales,  etc.,  which  were  kept  for  use  and  not  for  sale.98  The  court 
said:  "We  think  the  term  'merchandise'  not  only  may  be,  but 
often  is,  used  as  a  synonym  of  goods,  wares  and  commodities.  *  *  * 
If  used  in  an  insurance  policy  to  describe  the  goods  of  a  merchant, 
it  might,  perhaps,  be  very  properly  limited  to  the  goods  intended  for 
sale;  if  used  for  the  same  purpose  to  describe  the  goods  of  a  painter, 
it  might  be  held  to  cover  property  intended  for  use  and  not  for  sale." 
A  policy  on  all  the  furniture  contained  in  a  brick  building  and  addi- 
tions attached  covers  furniture  in  a  frame  building  on  the  next  lot 
extending  over  against  the  rear  of  the  brick  building,  and  used  in 
connection  therewith  as  a  storehouse.99  A  policy  on  lumber  in  a 
"yard"  does  not  protect  lumber  in  a  clearing  in  a  forest.100 

§  217.  Description  of  buildings. — "The  three-story  granite  build- 
ing" is  a  proper  description  of  a  building  with  a  granite  front  three 
stories  in  front  and  rear,  although  but  one  story  in  the  middle.101 
"The  frame  building  occupied  as  a  tannery"  does  not  include  an 
engine  and  machinery.102  A  building  twenty-five  feet  from  a  detached 
dwelling  is  not  contiguous  to  it.103  A  policy  describing  the  property 
as  "buildings  adjoined,  and  communicating,  occupied  *  *  *  sit- 
uated detached,"  does  not  mean  that  they  are  detached  from  each 
other,  but  that  the  whole  house  is  detached  from  other  buildings.10*  A 

97  Haley   v.    Dorchester,   etc.,    Ins.  101  Medina   v.    Builders',   etc.,    Ins. 
Co.,  12  Gray  (Mass.)  545   (1859).  Co.,  120  Mass.  225  (1876). 

98  Hartwell  v.  California  Ins.  Co.,  1('2  Sunderlin  v.  JEtna  Ins.  Co.,  18 
84  Me.  524,  24  Atl.  954  (1892).  Hun   (N.  Y.)   522   (1879). 

"Maisel  v.   Fire  Ass'n,   69   N.  Y.  103  Olson  v.  St.  Paul,  etc.,  Ins.  Co., 

Supp.  181,  59  App.  Div.   (N.  Y.)  461  35  Minn.  432  (1886). 

(1901).  1(*  Broadwater  v.  Lion  F.  Ins.  Co., 

100  Cook  v.  Loew,   69   N.  Y.   Supp.  34  Minn.  463    (1886). 
614,  34  Misc.  (N.  Y.)  276  (1901). 


THE    STANDARD    POLICY.  184 

policy  on  an  "elevator  building  and  additions"'  covers  a  warehouse 
standing  two  and  one-half  feet  from  the  elevator  building  attached 
thereto  by  boards  nailed  to  both  buildings.106  Whether  counters  and 
shelving  are  included  in  insurance  upon  a  building  depends  upon 
whether  they  are  movables  or  fixtures.107  A  policy  on  a  building  while 
in  the  process  of  construction  covers  the  building  after  it  is  com- 
pleted.108 Where  the  property  is  described  as  "the  Wolfe  house/'  it 
may  be  shown  by  parol  evidence  that  the  parties  intended  to  include  a 
certain  barn.109  A  "starch  manufactory"  includes  machinery  and  fix- 
tures necessary  for  the  manufacture  of  starch.110  A  policy  on  a  steam 
saw  mill  covers  not  only  the  building,  but  the  machinery  necessary  to 
make  it  a  steam  saw  mill  in  all  its  parts.111  A  policy  on  "an  unfin- 
ished house"  does  not  cover  material  which  has  been  prepared  for  the 
house  and  deposited  in  an  adjoining  building,112  but  the  word  "house" 
in  a  policy  includes  whatever  is  appurtenant  and  necessary  to  a  house 
as  a  building.113  A  policy  on  a  barn,  which,  although  an  agricultural 
building,  should  not  strictly  have  been  described  as  a  barn,  but  which, 
had  there  been  a  correct  description,  would  have  been  insured  at  the 
same  rate,  is  valid.114  Machinery  placed  in  a  mill  building  and  de- 
signed for  a  portion  of  the  mill  is  real  property  within  the  meaning 
of  a  valued  policy  law.115  A  policy  on  a  frame  steam  saw  mill,  with 
a  specific  amount  on  the  "boiler,  engine,  machinery  and  belting  con- 
tained therein,"  covers  a  planing  mill  in  a  shed  on  the  same  floor 
with  the  machinery  proper  and  connected  with  it  by  belting.116  Fix- 
tures built  into  and  forming  a  part  of  a  building  are  covered  "by  the 
policy,  although  such  fixtures  are  included  among  others  in  a  separate 
item  covered  by  other  insurance,  where  the  indemnity  on  the  latter 

104Cargill    v.    Millers',    etc.,    Ins.  "2  Ellmaker    v.    Franklin    F.    Ins. 

Co.,  33  Minn.  90  (1885).  Co.,  5  Pa.  St.  183  (1847). 

101  Capital   City   Ins.   Co.   v.   Cald-  m  Workman   v.    Insurance   Co.,    2 

well,  95  Ala.  77,  10  So.  355    (1892).  La.  507   (1830). 

108  Frost's,  etc.,  Works  v.  Millers',  m  Dobson  v.  Sotheby,  Moody  &  M. 

etc.,  Ins.  Co.,  37  Minn.  300,  5  Am.  90  (1827). 

St.  846   (1887).  "'British,  etc.,  Assur.  Co.  v.  Brad- 

10»Claffey  v.  Hartford  F.  Ins.  Co.,  ford,  60  Kan.  82,  55  Pac.  335  (1898) 

68  Cal.  169  (1885).  (under  ch.  102,  Laws  1893). 

1-°  Peoria,  etc.,  Ins.  Co.  v.  Lewis,  u"  James  River  Ins.  Co.  v.  Merritt, 

18  111.  553  (1857).  47  Ala.  387   (1872). 

111  Bigler  v.  New  York,  etc.,   Ins. 
Co.,  22  N.  Y.  402  (1860). 


185  FORMAL  PART  OF  CONTRACT.  §  217 

item  is  not  sufficient  to  cover  the  loss  on  the  fixtures.117  A  policy 
describing  a  building  as  used  for  the  manufacture  of  lead  pipe  cov- 
ers wooden  reels  on  which  the  pipe  is  coiled.118  The  words  "pottery 
building/'  as  descriptive  of  the  property,  do  not  cover  a  two-story 
brick  boiler  house,  built  at  the  end  of  but  not  connected  by  a  door 
with  a  three-story  brick  building  in  which  pottery  is  manufactured, 
where  the  lower  part  of  the  boiler  house  is  used  exclusively  in  con- 
nection with  another  and  distinct  business  in  a  different  building, 
although  the  second  story  is  used  for  storing  pottery.119  The  word 
"store"  is  equivalent  to  the  word  "shop,"  and  properly  describes  a 
bakery  and  restaurant.120  A  structure  which  has  been  injured  by 
fire  may,  while  in  its  injured  condition,  be  insured  as  a  "building."121 
Permission  to  use  a  building  for  "mercantile  purposes"  does  not  per- 
mit its  use  as  a  restaurant.122  The  word  "school-house"  means  a 
house  or  building  in  which  school  is  kept,  and  is  not  restricted  to 
a  district  school-house.123  A  cellar  wall  is  a  part  of  a  building,124 
and  in  describing  the  building  it  is  not  necessary  to  refer  to  the 
cellar  underneath  the  same.125  The  words  "the  two-story  brick  build- 
ing" are  sufficient  to  describe  a  building  which  is  two  stories  in  front 
and  one  in  the  rear.126  A  policy  on  a  planing  mill  building  and 
addition,  and  machinery,  including  shafting,  gearing,  belting,  saws, 
tools,  force  pump  and  hose  therein,  covers  an  engine  room  from 
which  motive  power  was  furnished,  which  was  situated  twenty-two 
feet  from  the  mill  building  and  connected  therewith  by  shafting  for 
the  transmission  of  power,  and  by  a  spout  through  which  shavings 
were  forced  into  the  engine  room.127  The  court  said:  "It  conclu- 
sively appears  that  the  engine  in  the  engine  room  was  the  only  mo- 

117  Niagara  F.  Ins.  Co.  v.  Heenan,  I23  Luthe  v.  Farmers',  etc.,  Ins.  Co., 
181  111.  575,  54  N.  E.  1052  (1899).  55  Wis.  543   (1882). 

118  Collins  v.  Charlestown,  etc.,  Ins.  124  Ervin   v.   New  York,   etc.,    Ins. 
Co.,  10  Gray  (Mass.)  155   (1857).  Co.,  3  T.  &  C.  (N.  Y.)  213  (1874). 

119  Forbes    v.    American    Ins.    Co.,  125  Benedict  v.  Ocean  Ins.  Co.,   31 
164  Mass.  402,  41  N.  E.  656    (1895).  N.    Y.    389     (1865).      See    Ohage    v. 

120  Richards    v.    Washington,    etc.,  Union  Ins.  Co.,  82  Minn.  426  (1901). 
Ins.  Co.,  60  Mich.  420  (1886).  l20Carr    v.    Hibernia    Ins.    Co.,    2 

121  Hamburg,  etc.,  Ins.  Co.  v.  Gar-  Mo.  App.  466  (1876). 

lington,  66  Tex.  103  (1886).  J37  Home,  etc.,  Ins.  Co.  v.  Roe,  71 

122  Garretson    v.    Merchants',    etc.,     Wis.  33   (1888). 
Ins.    Co.,    81    Iowa    727,    45    N.    W. 

1047  (1890). 


§    218  THE    STANDARD    POLICY.  186 

tive  power  for  propelling  any  of  the  machinery  iri  either  of  the 
buildings.  The  engine  was  used  for  no  other  purpose.  It  was 
therefore  an  essential  part  of  the  mill.  Without  it  there  would  have 
been  no  complete  mill.  *  *  *  Stress  is  laid  upon  the  fact  that 
the  engine,  which  was  the  principal  machine,  was  not  specially  men- 
tioned in  the  policy,  but  we  are  inclined  to  think  it  was  covered  by 
the  word  machinery,  and  that  other  things  were  specifically  enumer- 
ated for  fear  that  they  might  not  otherwise  be  included."  A  policy 
which  covered  "one  two-story  frame  dwelling  and  additions  thereto, 
occupied  by  the  assured  as  a  dwelling  house,"  was  held  to  cover  a  car- 
riage house  and  stable  under  the  same  roof  and  in  the  rear  of  the 
portion  occupied  for  dwelling  purposes,  but  attached  thereto.128 

§  218.  Location  of  property — In  general. — Under  this  provision, 
which  is  not  found  in  the  Massachusetts  form,  the  property  is  insured 
while  located  as  described  "and  not  elsewhere."  This  is  so  definite 
that  it  would  seem  that  there  could  be  but  little  controversy  as  to  its 
proper  construction.129  In  a  recent  case  it  appeared  that  the  policy 
was  issued  to  a  judge  who  was  in  the  habit,  while  holding  court  in 
neighboring  counties,  of  taking  the  insured  property  along  with  him 
for  use  in  such  other  places.  The  court  recognized  the  fact  that  a 


128  Hannan  v.  Williamsburgh,  etc.,  from  the  dwelling,  and  there  was  in 
Ins.  Co.,  81  Mich.  556  (1890).  The  the  policy  that  which  made  it  clear 
court  said:  "I  am  not  prepared  to  to  the  learned  judge  who  wrote  the 
say  that  the  words  'occupied  as  a  opinion  that  the  barn  was  not  in- 
dwelling house'  as  used  in  the  pol-  tended  to  be  included  in  the  general 
icy  of  insurance  necessarily  exclude  term  'dwelling  house.'  " 
the  idea  that  some  part  of  the  build-  129  "The  general  doctrine  is  fully 
ing  may  be  used  as  a  stable.  If  the  established  that  insurance  of  prop- 
family  lived  in  the  building  it  is  erty  in  a  certain  place  will  not  fol- 
not  deprived  of  its  character  as  a  low  the  property  on  its  removal  to 
dwelling  house  because  domestic  a  place  different  from  that  in  which 
animals  were  also  housed  there,  it  was  insured.  Some  courts  have 
Nor  does  this  view  conflict  with  the  in  some  particulars  qualified  this 
doctrine  in  English  v.  Franklin  F.  general  proposition,  *  *  *  but  the 
Ins.  Co.,  55  Mich.  273,  cited  by  de-  general  doctrine  is  recognized  in 
fendant's  counsel.  In  that  case  the  all  the  cases."  See  extensive  note 
barn  which  it  was  sought  to  bring  to  Benton  v.  Farmers'  Mut.  Ins.  Co., 
within  the  term  'dwelling  house  and  26  L.  R.  A.  237  (1894),  on  "Location 
additions  thereto'  was  a  separate  of  Movable  Property  as  Affecting 
building  detached  about  forty  feet  Fire  Insurance  Thereon." 


187  FORMAL  PART  OF  CONTRACT.  §  219 

number  of  cases  construed  somewhat  similar  language  as  being 
merely  descriptive  of  the  place  at  which  the  property  is  located  at 
the  time  the  insurance  was  obtained,  and  that  others  hold  that  such 
language  must  be  construed  with  reference  to  the  use  of  the  property, 
and  if  this  ordinarily  causes  it  to  be  absent  from  such  place,  the  com- 
pany is  liable.  It  was  said :  "However,  in  this  policy  the  insurance 
company  so  definitely  and  unequivocally  expresses  a  contract  by  which 
it  is  not  bound  for  the  loss  of  the  property  when  absent  from  the  place 
named  that  there  is  no  room  for  construction.  The  protection 
afforded  by  the  policy  is  expressly  limited  to  the  time  that  the  sub- 
ject of  the  insurance  shall  be  in  the  house  described,  and  when- 
ever it  was  taken  therefrom  it  was  removed  beyond  the  protection  of 
the  contract."130 

§  219.  location  material. — A  mere  description  of  the  place  where 
the  insured  property  is  located,  as  a  general  rule,  renders  the  loca- 
tion material  to  the  risk,  although  it  may  be  inferred  that  it  is  the 
intention  of  the  parties  that  property  of  a  certain  character  should 
be  covered  by  the  insurance  while  in  ordinary  use  at  other  places. 
"As  a  rule,"  says  Mr.  Joyce,131  "locality  and  place  are  essential,  but 
in  determining  how  far  locality  is  important  in  describing  property  in- 
sured, reference  must  be  had  to  the  character  of  the  property,  to  a 
consideration  of  what  is  the  primary  object  in  effecting  insurance, 
and  also  to  the  fact  to  what  uses  the  property  insured  would  in  all  rea- 
sonable probability  be  put.  So  usage  may  be  a  controlling  factor  in 
the  matter,  as  may  also  be  the  fact  in  the  case  of  certain  kinds  of  prop- 
erty, whether  removal  thereof  is  permanent  or  temporary.  Where  the 
policy  is  upon  a  class  of  property,  the  risk  upon  which  from  its  par- 
ticular character  depends  so  much  upon  place  or  location,  that  the 
same  constitutes  an  essential  element  of  the  contract,  as  in  the  case  of 
a  stock  of  goods  or  furniture  'contained  in'  a  specified  building, 
then  such  property  will,  as  a  rule,  not  be  covered  if  changed  or 
removed  to  another  place  or  locality.  The  insurer,  for  various  rea- 

130  British,  etc.,  Assur.  Co.  v.  Mil-  Ass'n,  119  Mich.  427,  75  Am.  St.  410 

ler,  91  Tex.  414,  66  Am.  St.  901,  29  (1899). 

L.  R.  A.  545  (1898);  Green  v.  Liver-  131  2  Joyce  Ins.,  §  1742.  See  Brad- 
pool,  etc.,  Ins.  Co.,  91  Iowa  615  bury  v.  Fire  Ins.  Ass'n,  80  Me.  396 
(1894);  Mawhinney  v.  Southern  (1888);  Lyons  v.  Providence,  etc., 
Ins.  Co.,  98  Cal.  184  (1893);  Haws  Ins.  Co.,  14  R.  I.  109,  51  Am.  Rep. 
v.  St.  Paul,  etc.,  Ins.  Co.  (Pa.),  15  362  (1883). 
Atl.  915  (1888);  L'Anse  v.  Fire 


§    219  THE   STANDARD    POLICY.  188 

sons  in  cases  of  this  character,  might  refuse  to  accept  the  risk  al- 
together, or  might  accept  it  at  an  enhanced  premium  if  he  had  known 
that  its  location  was  other  than  that  designated,  and  the  right  of 
the  insurer  to  know  exactly  what  risk  he  is  undertaking  can  not  be 
denied.  But  if  the  primary  object  is  to  insure  the  property  described, 
and  the  character  of  the  property  is  such  as  to  warrant  that  presump- 
tion, then  its  exact  location  may  be  a  subordinate  matter  of  more 
or  less  importance." 

There  is  a  line  of  cases  which  construe  the  statement  that  the 
insured  property  is  "contained  in"  a  certain  place  as  descriptive  mere- 
ly of  its  location  at  the  time  the  insurance  was  obtained.  The  de- 
scriptive words  are  construed  with  reference  to  the  use  of  the  prop- 
erty, and  if  this  ordinarily  causes  it  to  be  absent  from  such  place, 
and  while  so  absent  it  is  destroyed,  the  property  is  nevertheless  pro- 
tected by  the  policy.132  Such  descriptive  words  are  thus  held  to 
amount  merely  to  a  warranty  that  the  property  is  at  the  place  desig- 
nated at  the  time  the  policy  is  executed,  but  not  that  it  will  remain 
there.  The  insured  thus  has  the  right  to  the  use  of  the  property  in 
the  usual  manner  without  losing  his  protection,  and  he  may  remove 
it  temporarily  if  it  be  necessary  in  making  such  use  of  it.133 

Thus,  where  the  policy  was  upon  a  house,  grain,  hay  and  horses 
situated  on  section  22,  it  was  held  to  cover  the  horses  while  in  ordinary 
use  on  the  farm  or  temporarily  away  from  home.13*  So,  a  sealskin 
coat  "contained  in  a  frame  dwelling,"  etc.,  was  held  covered  by  the 
policy  while  in  a  fur  store,  where  it  had  been  sent  for  repairs.135  So, 
it  was  held  that  where  the  company  insured  farm  horses,  it  assumed 
any  risk  arising  from  the  ordinary  use  of  the  animals  for  farm  pur- 
poses, although  the  risk  was  greater  than  that  assumed  while  the  ani- 
mals were  in  the  barn.136  Insurance  upon  carriages  "contained  in" 
a  described  building  "occupied  as  a  livery  and  sales  stable"  covers  a 

132  McCluer    v.    Girard,    etc.,    Ins.  134  Peterson   v.    Mississippi   Valley 
Co.,  43  Iowa  349,  22  Am.  Rep.   249  Ins.    Co.,    24    Iowa   494    (1868).     To 
(1876);   Mills  v.  Farmers'  Ins.  Co.,  the  same  effect,  see  Mills  v.  Farm- 
37  Iowa  400  (1873);  American,  etc.,  ers'    Ins.    Co.,   37    Iowa   400    (1873), 
Ins.  Co.  v.  Haws  (Pa.),  11  Atl.  107  where    the    horses   were    killed    by 
(1887).  lightning     when     six     miles     from 

133  Farmers',    etc.,    Ins.    Ass'n    v.  home. 

Kryder,  5  Ind.  App.  430,  51  Am.  St.  135Noyes    v.     Northwestern,     etc., 

284   (1892).     See,  also,  Bradbury  v.  Ins.  Co.,  64  Wis.  415  (1885). 

Westchester  F.  Ins.  Co.,  80  Me.  396,  I3I)  Holbrook  v.  St.  Paul,  etc.,  Ins. 

6  Am.  St.  219  (1888).  Co.,  25  Minn.  229   (1878). 


189 


FORMAL    PART    OF    CONTRACT. 


219 


carriage  while  undergoing  repairs  at  a  repair  shop.137  But  the  de- 
cisions are  not  uniform  upon  this  question,  as  some  courts  construe 
the  provision  more  strictly.  Thus,  where  the  policy  insured  plain- 
tiffs "frame  stable  building,  occupied  by  the  assured  as  a  hack,  livery 
and  boarding  stable,  situated  on  the  north  side  of  Court  street,  Au- 
burn, Me.,"  it  was  held  not  to  cover  the  loss  of  a  hack  while  in  a  re- 
pair shop  on  another  street,  to  which  it  had  been  removed  before 
the  fire  without  the  knowledge  and  consent  of  the  company.138 

So,  a  policy  on  a  fire  engine,  hose,  hose-cart,  while  located  and 
contained  in  the  engine-house,  "and  not  elsewhere,"  does  not  cover 


137  Niagara  F.   Ins.   Co.  v.   Elliott, 
85  Va.  962,  9  S.  E.  694  (1889). 

138  Bradbury  v.  Fire  Ins.  Ass'n,  80 
Me.  396,  15  Atl.  34,  Woodruff's  Ins. 
Gas.   170    (1888).     The   court   said: 
"The    general    rule    stated    by    text 
writers    and    held    by    the    general 
current  of  decided  cases,  is  that  the 
place  where  the  personal  property 
insured  is  kept  is  of  the  essence  of 
the  contract,  as  by  that  the  charac- 
ter of  the  risk  is  largely  determined, 
and  the  property  is  covered  by  the 
policy  only  while  in  the  place  de- 
scribed:    Wood  Ins.,  p.  110;  Blodg- 
ett   Fire    Ins.,   p.    22;    Eddy    Street 
Iron  Foundry  v.  Hampden,  etc.,  Ins. 
Co.,  1  Cliff.  (C.  C.)  300  (1859);  Mary- 
land F.  Ins.  Co.  v.  Gusdorf,  43  Md. 
506     (1875);     Fitchburg    R.    Co.    v. 
Charlestown,  etc.,   Ins.  Co.,   7  Gray 
(Mass.)    64    (1856).     The   following 
cases  are  cited  as  an  exception  to 
the  general  rule  and  as  sustaining 
the  plaintiff's  contention:     Everett 
v.  Continental  Ins.  Co.,  21  Minn.  76 
(1874);    Holbrook  v.  St.  Paul,  etc., 
Ins.  Co.,  25  Minn.  229    (1878);   Mc- 
Cluer  v.  Girard,  etc.,  Ins.  Co.,  43  Iowa 
349   (1876);  Longueville  v.  Western 
Assur.  Co.,  51  Iowa  553  (1879);  Ly- 
ons   v.    Providence,    etc.,    Ins.    Co., 
13   R.   I.   347    (1881).     We   think  a 
careful    examination    of    all    these 
cases  will  show  that  the  chattels  in- 


sured were  so  described  in  the  pol- 
icy that  they  can  be  identified  with- 
out reference  to  the  building  or 
place  where  they  were  kept,  and  the 
courts  held  that  the  words  'con- 
tained in'  a  certain  building  or  kept 
in  a  certain  building  or  place  was  a 
part  only  of  the  description  of  the 
chattel,  and  if,  from  its  nature  or 
character  or  ordinary  use,  the  par- 
ties must  have  understood  that  it 
was  to  be  out  of  the  building  or 
place  a  part  of  the  time  in  ordinary 
use,  the  policy  should  be  held  to 
cover  it  while  so  out.  This  is 
going  to  the  verge  in  construing 
the  language  used  by  the  parties  to 
the  contract,  when,  ordinarily,  it 
does  not  bear  such  meaning.  But 
this  case  does  not  appear  to  us  to 
be  within  the  authority  of  those 
cases.  *  *  *  *  The  policies  are 
similar  to  an  insurance  of  a  shop- 
keeper on  his  stock  of  goods  in  his 
shop,  or  of  a  railroad  company  on 
its  rolling  stock  on  its  road,  con- 
stantly changing.  In  such  cases  the 
property  insured  can  be  ascertained 
only  from  the  place  of  business 
named:  Lyons  v.  Providence,  etc., 
Ins.  Co.,  13  R.  I.  347  (1881).  The 
policies  insure  such  of  the  plain- 
tiff's carriages,  hacks,  etc.,  as  are 
contained  in  his  stable  at  the  time 
of  the  loss." 


§    220  THE    STANDARD    POLICY.  190 

a  loss  on  the  property  which  was  being  used  at  the  time  to  extinguish 
a  fire  several  hundred  feet  from  the  fire-engine  house.139 

So,  where  the  application  requests  insurance  upon  property  "while 
on  the  premises  only/'  and  the  policy  covers  farming  utensils,  and 
live  stock  on  the  described  premises,  and  hay  in  stacks,  it  does  not 
cover  property  taken  temporarily  for  the  purpose  of  plowing  to  a 
place  twenty  miles  distant.140  This  case  recognizes  the  rule  that  the 
property  insured  may  sometimes  be  taken  from  the  place  described 
in  the  policy  where  it  is  of  such  a  character  that  the  use  must  have 
been  within  the  contemplation  of  the  parties,  but  holds  that  the 
language  of  this  policy  takes  it  out  of  the  operation  of  the  rule.  A 
harvesting  machine  which  is  insured  "while  operating  in  the  grain 
fields,  and  in  transit  from  place  to  place  in  connection  with  harvest- 
ing," was  held  not  protected  while  in  a  blacksmith's  shop  for  the  pur- 
pose of  being  repaired.141 

Where  the  property  is  removed  the  policy  is  merely  suspended, 
and  if  there  is  no  loss  and  the  property  is  returned  it  re-attaches.142 
The  right  of  the  company  to  deny  liability  where  the  property  in- 
sured is  specifically  located  in  a  given  building,  on  the  ground  that 
it  has  been  removed  and  was  destroyed  at  a  different  place,  may  be 
waived  by  acts  and  declarations  of  the  company  after  the  loss  show- 
ing an  intention  to  relinquish  such  right  after  knowledge  of  re- 
moval.143 

§  220.  Illustrations.  —  Where  the  policy  insured  household  goods 
contained  in  a  dwelling  house,  and  they  were  burned  while  stored  in 
a  barn  on  the  same  premises,  it  was  held  that  the  knowledge  of  the 
company  that  the  goods  were  so  stored  did  not  amount  to  a  waiver 
of  the  provision  in  the  policy.144  Mr.  Justice  Cooley  said:  "The 
defendant  merely  undertook,  for  a  certain  consideration,  the  respon- 


139  L'Anse  v.  Fire  Ass'n,  119  Mich.  Ins.    Co.,    97    Cal.   468,   32   Pac.    512 

427,  75  Am.  St.  410  (1899);  British,  (1893). 

etc.,  Assur.   Co.  v.   Miller,   91   Tex.  142  British,  etc.,  Assur.  Co.  v.  Mil- 

414,  66  Am.  St.  901  (1898).  ler,    91    Tex.    414,    66    Am.    St.    901 

"°Lakings  v.  Phoenix  Ins.  Co.,  94  (1898). 

Iowa  476,  28  L.  R.  A.  70  (1895).  "3  Montgomery    v.    Delaware    Ins. 

"'Mawhinney    v.     Southern     Ins.  Co.,  55  S.  C.  1,  32  S.  E.  723   (1898). 

Co.,  98  Cal.  184,  32  Pac.  945  (1893);  M  English  v.  Franklin  F.  Ins.  Co., 

Benicia   Agri.    Works   v.    Germania  55    Mich.    273,    54    Am.    Rep.    377 

(1884). 


191  FORMAL    PART    OF    CONTRACT.  §    220 

sibility  while  the  goods  were  in  the  house,  and  it  was  at  the  plaintiff's 
option  to  have  them  there  or  elsewhere  as  he  pleased.  If  they  were 
lost  by  fire  while  elsewhere,  the  loss  was  not  one  against  which  the 
defendant  had  undertaken  to  insure  him,  nor  was  the  defendant 
called  upon  to  cancel  the  policy  by  reason  of  the  goods  being  removed 
from  the  building  where  they  were  insured.  If  the  dwelling  house  had 
been  repaired  and  the  goods  restored  to  it,  the  policy  would  again  have 
covered  them ;  and  this,  for  anything  that  appears  to  the  contrary,  may 
have  been  what  both  parties  desired.  At  any  rate,  it  does  not  appear 
that  the  plaintiff  desired  the  policy  canceled,  and  if  it  had  desired  it 
the  cancellation  would  have  been  optional  with  the  defendant."  A 
policy  upon  the  contents  of  a  building,  described  in  no  other  way, 
will  not  cover  articles  then  contained  in  the  building  after  they  are 
removed  and  stored  elsewhere.145  A  policy  covering  "oil  while  con- 
tained in  a  tank"  in  a  certain  location  was  held  binding,  although  the 
tank  had  been  swept  away  from  such  location  by  a  flood.147  A  policy 
upon  horses  and  colts  "while  in  a  barn,  and  by  lightning  only  while  in 
use  or  running  in  the  pasture,  while  on  his  farm  in  the  town  of  Le 
Seur,  Minn.,"  covers  loss  by  lightning  at  any  place  in  the  town.148 
Where  a  horse  is  insured  "while  in  the  barn  or  in  the  fields,"  it  was 
held  to  be  covered  while  in  a  barn  built  on  the  farm  after  the  policy 
was  issued.150  A  vessel  insured  while  lying  at  a  certain  dock  is  not 
covered  by  the  policy  while  moored  outside  in  the  river  some  700 
yards  distant  for  the  purpose  of  being  refitted.151  Where  the  policy 
described  the  goods  as  being  "in  the  store  part  of  the  building,"  it 
was  held  not  to  cover  loss  of  goods  which  had  been  removed  to  the 
second  or  third  stories,  which  were  not  used  for  ordinary  store  pur- 
poses.152 A  policy  on  "furniture  in  a  house"  covers  property  stored 
in  a  garret  which  is  not  in  common  use.153  Where  the  policy  de- 
scribed the  property  as  contained  in  the  "frame  dwelling  house  and 
bake-house,  front  and  rear,  situated  at  No.  17  Thomas  St.,"  it  did  not 

145  Benton   v.    Farmers',   etc.,    Ins.  15°  Trade    Ins.    Co.    v.    Barracliff, 

Co.,  102  Mich.  281,  26  L.  R.  A.  237  16  Vroom   (N.  J.)  543   (1883). 

(1894).  151  Pearson    v.    Commercial,     etc., 

147  Western,    etc.,    Pipe    Lines    v.  Assur.   Co.,   L.  R.   1  App.   Cas.   498 

Home  Ins.  Co.,  145  Pa.  St.  346,   22  (1876). 

Atl.  665  (1891).  1MBoynton    v.    Clinton,    etc.,    Ins. 

148Boright  v.  Springfield,  etc.,  Ins.  Co.,  16  Barb.  (N.  Y.)  254  (1853). 

Co.,  34  Minn.  352  (1885).  153  Clark  v.  Firemen's  Ins.  Co.,  18 

La.  431   (1841). 


§    220  THE    STANDARD    POLICY.  192 

cover  flour  in  a  shed  leading  from  the  bake-house  to  the  front  house.154 
Wearing  apparel  described  as  contained  in  a  certain  building  was  not 
covered  by  the  policy  after  it  was  removed  to  a  place  where  the  owner 
was  residing.  The  removal  was  not  such  a  temporary  one  as  the 
parties  might  reasonably  be  supposed  to  have  contemplated.  The 
court  said:  "The  ordinary  use  of  clothing  in  such  cases  does  not 
include  the  using  involved  in  a  long  journey,  or  during  a  protracted 
visit,  during  which  the  goods  may  be  exposed  to  risks  that  the  in- 
surer would  not  have  been  disposed  to  incur.  It  would  be  unreason- 
able to  infer  any  intention  of  that  kind."155  But  wearing  apparel  is 
insured  while  worn  by  the  party  in  the  streets  of  a  city.156  Where 
the  insured  desired  to  remove  goods  covered  by  the  policy  to  another 
building  and  secured  an  indorsement  on  the  policy  to  the  effect  that 
"it  was  transferred  to  cover  similar  property  in  the  new  building/' 
and  the  goods  were  destroyed  before  they  were  removed,  the  company 
was  held  liable  for  the  loss.  The  court  said:157  "The  evidence 
clearly  shows  that  the  object  was  to  continue  the  insurance  until  after 
their  removal,  and  it  appears  to  me  to  repel  the  idea  that  they  should 
be  uninsured  in  the  meantime,  while  remaining  in  the  place  they  were 
in  while  first  insured."  A  policy  covered  goods  in  two  places,  one 
a  sales-room  and  the  other  a  storeroom,  and  the  insured,  wishing  to 
remove  the  goods  from  the  storage  room  to  the  sales-room,  gave 
notice  of  the  fact  to  the  company,  and  obtained  an  indorsement 
upon  the  policy  acknowledging  notice  of  the  fact  that  the  goods  "were 
being  removed,"  and  agreeing  for  a  consideration  that  "the  policy 
should  cover  the  goods  in  both  places  during  removal  and  thereafter 
in  the  last  named  locality  only."  It  was  held  that  "when  this  consent 
was  obtained  and  indorsed  upon  the  policy,  it  did  not  make  it  neces- 
sary for  the  assured  to  remove.  They  might  avail  themselves  of  the 
privilege  they  had  purchased  or  they  might  refrain  from  so  doing. 
If  they  did  not  move  they  lost  the  money  they  paid  to  secure  the 
privilege,  but  they  lost  nothing  more.  Their  policy  was  unaffected 
by  the  indorsement  unless  they  acted  under  it.  If  they  acted  under  it 
and  entered  on  the  work  of  removal  they  were  not  bound  to  suspend 


164  Moadinger  v.  Mechanics'  F.  Ins.  1M  Longueville  v.  Western  Assui. 

Co.,  2  Hall  (N.  Y.)  490  (1829).  Co.,  51  Iowa  553  (1879). 

195  Towne  v.  Fire  Ass'n,  27  111.  I5J  Kunzze  v.  American,  etc.,  Ins. 

App.  433  (1888).  Co.,  41  N.  Y.  412  (1869). 


193  FORMAL  PAKT  OP  CONTRACT.  §  221 

their  business  while  that  work  was  in  progress  and  devote  all  their 
energies  to  the  transfer  of  the  goods.  They  had  the  right  to  con- 
tinue to  buy  and  ship,  pending  the  removal,  as  well  as  before  and  after, 
just  as  they  were  in  the  habit  of  doing;  and  the  policy  covered  concur- 
rently with  others  the  stock  actually  used  in  the  ordinary  way  without 
regard  to  the  specific  articles  of  which  it  was  composed.  While  the 
removal  was  in  progress  the  protection  of  the  policy  was  on  each  part 
of  the  stock  according  to  its  pro  rata  value.  When  the  whole  stock 
was  transferred,  the  whole  effect  of  the  policy  was  transferred  to  the 
actual  site  of  the  stock.  We  think,  therefore,  that  the  indorsement  did 
not  limit  the  policy  to  the  articles  that  were  in  the  building  from  which 
they  were  to  be  removed  at  the  time  of  the  indorsement."158  A  policy 
insured  against  loss  by  fire  a  threshing  machine,  engine  and  separator 
"while  not  in  use."  The  outfit  had  been  in  use,  but  was  hauled  to 
another  place  and  left  standing  near  a  farm  house  preparatory  for 
use,  and  a  few  days  later  was  there  destroyed  by  fire.  It  was  held 
that  the  machines  were  not  in  use  within  the  meaning  of  the  policy.159 
So,  insurance  on  a  harvester  while  in  use  in  "Tulare  county"  does 
not  cover  a  loss  which  occurred  while  it  was  stored  in  a  shed,  not  being 
actually  used  for  harvesting  purposes.160 

§  221.  Risks  insured  against. — The  policy  insures  "against  all  di- 
rect loss  or  damage  by  fire  except  as  herein  provided."  These  excep- 
tions, which  include  explosions,  lightning,  fall  of  the  building,  in- 
vasion, and  negligence  after  the  fire,  will  be  referred  to  hereafter. 
The  restrictive  word  "direct"  does  not  appear  in  the  Massachusetts 
form.  "Direct  loss  or  damage  by  fire"  means  loss  or  damage  accru- 
ing directly  from  fire  as  the  destroying  agency,  in  contradistinction 
to  the  remoteness  of  fire  as  such  agency.  The  word  "direct"  means 
merely  the  immediate  or  proximate  as  distinguished  from  the  remote 
cause.162  Loss  by  fire  means  the  result  of  the  ignition  of  the  prop- 
erty or  of  some  substance  near  it.  But  it  is  not  necessary  that  any 

168  Sharpless   v.    Hartford   F.    Ins.  Assur.  Co.,  122  Gal.  595,  55  Pac.  417 

Co.,  140  Pa.  St.  437   (1891).  (1898). 

159  Minneapolis,    etc.,    Co.   v.   Fire-  162  Ermentrout  v.  Girard,  etc.,  Ins. 

men's  Ins.  Co.,  57  Minn.  35,  58  N.  Co.,   63   Minn.   305,   56   Am.   St.   481 

W.  819    (1894).  (1895). 

100Slinkard     v.      Manchester      F. 
13 — ELLIOTT  INS. 


§    221  THE   STAXDARD    POLICY.  194 

part  of  the  insured  property  shall  be  actually  ignited  or  consumed  by 
fire.163  Thus,  in  one  case  a  house  protected  by  a  policy  of  insurance 
against  damage  by  fire  was  injured  by  the  falling  of  a  part  of  the 
wall  of  an  adjoining  house,  and  it  was  held  that  fire  was  the  proxi- 
mate cause  of  the  loss,  and  that  the  insurers  were  liable,  although 
the  house  insured  had  never  been  on  fire.164  The  word  "fire"  does  not 
include  heat  of  a  degree  too  low  to  cause  ignition,  but  actual  ignition 
is  not  necessary,  as  the  policy  protects  against  all  the  direct  conse- 
quences of  actual  ignition.165  Where  the  property  was  injured  by 
great  heat  occasioned  by  the  closing  of  a  register,  and  there  was  no 
ignition,  it  was  held  that  the  damage  was  not  caused  by  fire  within 
the  meaning  of  the  policy.166  The  rule  is  thus  stated  by  Eichards  :167 
"A  proximate  result  of  fire  within  the  rule  of  law  establishing  liabil- 
ity of  the  insurer  may  include  other  things  than  combustion ;  as,  for 
example,  injuries  to  the  insured  property  by  water  from  fire  engines 
or  exposure  of  goods  during  a  fire,  or  during  their  reasonable  re- 
moval, a  loss  of  goods  by  theft  during  a  fire  or  during  a  reasonable 
removal  to  a  place  of  safety."  Damage  by  water  used  in  preventing 
the  destruction  of  a  building  and  its  contents  by  fire  is  within  a  pol- 
icy insuring  against  damage  by  fire.168  So;  a  fire  is  the  proximate 
cause  of  damage  to  goods  which  is  suffered  in  the  process  of  removal 
to  save  them  from  fire.169  But  such  a  policy  does  not  protect  against 
damage  occasioned  to  the  goods  while  being  removed  from  a  neighbor- 
ing building  under  the  apprehension  of  a  spread  of  fire.170 

A  fire  policy  covers  loss  or  damage  by  fire  occasioned  by  explosion 

193  Transatlantic    F.     Ins.     Co.     v.  Republic,   etc.,   Ins.   Co.,   57   Me.  91, 

Darsey,  56  Md.  70  (1880).  2  Am.   Rep.   22    (1869);    Stanley   v. 

184  Johnston  v.  West  Scotland  Ins.  Western,  etc.,  Ins.  Co.,  L.  R.  3  Exch. 

Co.,  7  Shaw  &  D.  52  (1828);  Ermen-  74  (1868). 

trout   v.   Girard,   etc.,    Ins.    Co.,    63  3GS  John  Davis  &  Co.  v.  Insurance 

Minn.  305   (1895).  Co.,    115    Mich.    382,    73    N.    W.    393 

185 Gibbons   v.    German    Ins.,    etc.,  (1897). 

Inst.,  30  111.  App.  263  (1888).  169  Balestracci    v.    Firemen's    Ins. 

198  Austin   v.    Drew,   6   Taunt.    435  Co.,  34  La.  Ann.  844   (1882);   Lewis 

(1816);     Babcock    v.     Montgomery,  v.  Springfield,  etc.,  Ins.  Co.,  10  Gray 

etc.,  Ins.  Co.,  6   Barb.    (N.  Y.)    637  (Mass.)  159  (1857). 

(1849);    Scripture    v.    Lowell,    etc.,  1TO  Hillier  v.  Allegheny,   etc.,   Ins. 

Ins.  Co.,  10  Cush.    (Mass.)   356;    57  Co.,  3  Pa.  St.  470,  45  Am.  Dec.  656 

Am.  Dec.  Ill  (1852).  (1846). 

187  Richards  Ins.,  §  128;   White  v. 


195  FORMAL   PART   OF    CONTRACT.  §    221 

or  any  other  cause  not  expressly  excepted  in  the  policy.171  In  an 
elaborate  decision  in  which  many  cases  are  reviewed,  Mr.  Justice 
Gushing  said:172  "The  rule  should  be  that  where  the  effects  pro- 
duced are  the  immediate  results  of  the  action  of  the  burning  substance 
in  contact  with  a  building,  it  is  immaterial  whether  these  results 
manifest  themselves  in  the  form  of  combustion  or  explosion,  or  of 
both  combined.  In  either  case  the  damage  occurring  is  by  the  action 
of  fire  and  covered  by  the  ordinary  terms  of  the  policy  against  loss 
by  fire."  Damage  by  fire  caused  by  a  break  in  pipes  resulting  from 
a  boiler  explosion  within  the  building  is  not  covered  by  a  policy 
which  provides  that  the  company  shall  not  be  liable  for  loss  caused  by 
explosion  unless  fire  ensues,  and  in  that  event  for  the  damage  by  fire 
only.173  A  lamp  is  not  a  fire  within  the  meaning  of  a  policy  cover- 
ing damages  by  fire  or  lightning,  and  there  can  be  no  recovery  for 
damages  caused  by  smoke  therefrom  when  no  ignition  occurs  out- 
side of  the  lamp.174  There  can  be  no  recovery  for  overheating  caused 
by  the  unskillful  use  of  fire  in  a  factory,  where  there  is  no  combus- 
tion.175 Where  fire  is  employed  as  an  agent,  either  for  ordinary  pur- 
poses of  heating  the  insured  building,  or  for  the  purposes  of  manu- 
facture, or  as  an  instrument  of  art,  the  company  is  not  liable  for  the 
consequences  so  long  as  the  fire  itself  is  confined  within  the  limits 
of  the  agencies  employed.  Hence  under  a  policy  insuring  against 
all  direct  loss  or  damage  by  fire,  the  insurer  is  not  liable  for  dam- 
ages arising  from  smoke  or  soot  coming  from  a  defective  stove- 
pipe, and  resulting  from  a  fire  intentionally  built  in  a  stove  and  kept 
confined  therein,  nor  for  damage  caused  by  water  used  in  cooling 
portions  of  the  building  heated  by  such  stove-pipe,  when  the  use  of 
such  water  is  not  necessary  to  prevent  ignition.  In  order  to  bring 
such  consequences  within  the  risk  there  must  be  actual  ignition  out- 
side of  the  agencies  employed,  not  purposely  caused  by  the  insured, 
and  the  consequence  of  such  ignition  dehors  the  agencies.176  In  a 

1T1Germania  Ins.  Co.  v.  Sherlock,  Co.,   62   N.   Y.   Supp.   824,   30   Misc. 

25  Ohio  St.  33  (1874).  (N.  Y.)  72   (1899). 

172  Scripture   v.    Lowell,    etc.,    Ins.  m  Scripture   v.   Lowell,    etc.,    Ins. 
Co.,  10  Gush.    (Mass.)    356,   57   Am.  Co.,   10  Gush.    (Mass.)    356,   57  Am. 
Dec.  Ill  (1852).  Dec.    Ill     (1852).      See    generally, 

173  John  Davis  &  Co.  v.  Insurance  note  to  36  Am.  St.  857. 

Co.,  115  Mich.  382,  73  N.  W.  393  178  Cannon  v.  Phcenix  Ins.  Co.,  110 
(1897).  Ga.  563,  78  Am.  St.  124  (1900). 

174  Fitzgerald  v.  German,  etc.,  Ins.     See,  also,  Gibbons  v.   German  Ins., 

etc.,  Inst,  30  111.  App.  263  (1889). 


§    221  THE    STANDARD   POLICY.  196 

recent  case  in  Massachusetts177  it  was  held  that  the  company  was  liable 
for  damages  caused  to  the  insured  goods  by  smoke  and  soot  escaping 
from  the  stove  in  which  the  fire  had  been  built  for  ordinary  pur- 
poses. It  was  contended  that  the  policy  was  not  intended  to  apply 
to  a  fire  which  is  lighted  and  maintained  for  ordinary  purposes  for 
which  fires  are  used  in  buildings,  and  which  is  confined  to  its  place 
thus  fitted  for  such  fires.  But  Mr.  Justice  Knowlton  said:  "We 
are  not  disposed  to  question  the  soundness  of  the  general  principle 
upon  which  this  contention  is  founded,  and  we  find  it  by  no  means 
easy  to  determine  whether  the  principle  should  be  extended  far 
enough  to  cover  an  occasional  fire  in  a  chimney  incidental  to  the  or- 
dinary use  of  the  stove,  or  whether  such  a  fire  should  be  held  one 
for  whose  unexpected  injurious  consequences  an  insurance  company 
should  be  liable.  We  are  inclined  to  the  opinion  that  a  distinction 
should  be  made  between  a  fire  intentionally  lighted  and  maintained 
for  a  useful  purpose  in  connection  with  the  occupation  of  a  building 
and  a  fire  which  starts  from  such  a  fire  without  human  agency,  in 
a  place  where  fires  are  never  lighted  nor  maintained,  although  such 
ignition  may  naturally  be  expected  to  occur  occasionally  as  an  inci- 
dent to  the  maintenance  of  necessary  fires,  and  although  the  place 
where  it  occurs  is  constructed  with  a  view  to  prevent  damage  from 
such  ignition.  A  fire  in  a  chimney  should  be  considered  rather  a 
hostile  fire  than  a  friendly  one,  and  as  such,  if  it  causes  damage,  it 
is  within  the  provisions  of  ordinary  contracts  of  fire  insurance." 

A  policy  on  a  tug  and  her  fixtures  insuring  against  loss  or  damage 
by  fire  does  not  cover  injury  to  the  interior  of  her  boiler  caused  by 
overheating  or  leaking  of  water.  The  terms  of  the  policy  in  this 
case,  said  the  court,  "are  such  as  are  ordinarily  employed  in  fire  pol- 
icies on  steam  vessels  where  the  risk  is  taken  on  the  hull  and  all  the 
machinery  and  appurtenances  of  the  vessel.  And  it  is  conceded  that  for 
any  injury  done  by  fire  to  any  part  of  the  vessel  or  to  the  machinery, 
whether  to  the  boiler  or  to  any  other  part,  if  the  injury  was  done  by 
ignition  or  heat  generated  beyond  the  furnace,  where  fire  was  intend- 
ed to  burn,  the  insurance  company  would  be  liable.  But  the  subject 
of  insurance  here  necessarily  excepts  the  operation  of  fire  to  some 
extent.  The  subject  of  the  policy  is  a  steam  tug,  her  boiler  and 

177  Way  v.  Abington,  etc.,  Ins.  Co.,  Am.  St.  857   (1892);   Hillier  v.  Alle- 

166  Mass.  67,  55  Am.  St.  379  (1896).  gheny,   etc.,    Ins.   Co.,   45   Am.    Dec. 

See  further,  extended  notes  to  Gil-  656,  55  Am.  St.  379  (1846). 
son  v.  Delaware,  etc.,  Canal  Co.,  36 


197  FORMAL  PART  OF  CONTRACT.  §  222 

other  machinery.  Of  necessity  fire  was  to  be  maintained  in  the  fur- 
nace and  in  contact  with  the  boiler  as  a  means  to  generate  the  motive 
power  by  which  the  vessel  could  be  propelled.  The  burning  or  warp- 
ing of  the  bars  of  the  grate  in  the  furnace,  if  produced  by  the  action 
of  fire,  could  hardly  be  supposed  to  be  within  the  scope  of  the  risk 
insured  against,  however  general  the  terms  of  the  policy.  And  if 
that  be  true  of  the  furnace,  it  is  difficult  to  perceive  why  it  is  not 
equally  true  of  such  parts  of  the  boiler  as  are  brought  in  contact 
with  the  fire  in  the  furnace  or  heat  evolved  therefrom.  The  fire,  while 
in  the  furnace,  was  in  its  proper  place,  and  where  it  was  intended  to 
be ;  and  it  was  placed  there  to  act  upon  the  boiler,  which  in  the  course 
of  time  would  be  burned  out  or  warped  as  the  grate  in  the  furnace 
would  be  by  the  continued  action  of  fire  thereon.  And  if  such  re- 
sults of  the  action  of  fire  upon  these  materials,  while  in  ordinary 
use,  are  not  within  the  risk  it  would  be  difficult  to  see  upon  what  de- 
gree of  heat  or  under  what  conditions  the  liability  under  the  policy 
would  attach  for  the  injury  caused  by  the  action  of  fire  while  con- 
tained in  the  furnace  and  producing  no  external  ignition.  If  a  per- 
son has  his  house  insured  against  loss  or  damage  by  fire,  and  he  should 
make  a  fire  in  his  grate  or  fire-place  of  such  intense  heat  as  to  crack 
his  chimney  or  to  warp  or  crack  his  mantel-pieces,  it  could  hardly  be 
contended  that  he  could  hold  the  insurance  company  liable  for  such 
damage  and  for  damage  so  unintentionally  allowed  to  be  produced  by 
the  action  of  fire.  In  such  a  case  the  fire  would  not  have  extended 
beyond  the  proper  limits  within  which  it  was  intended  to  burn,  but 
the  heat  emitted  therefrom  would  have  produced  effects  not  intended 
by  the  insured.  No  doubt  there  are  many  instances  where  the  in- 
surer has  been  held  liable  for  injury  done  to  buildings  or  furniture 
by  heat  or  smoke  without  actual  ignition,  where  the  heat  or  smoke 
is  produced  from  fire  outside  of  the  limits  of  the  place  in  which  it  was 
intended  by  the  contract  of  insurance  to  burn.  But  that  is  a  differ- 
ent question  from  that  presented."178 

§  222.  Proximate  cause — Electric  wires. — In  an  action  upon  a 
policy  insuring  a  building,  machinery,  dynamos  and  other  electric 
fixtures  of  ah  electric  company,  it  appeared  that  the  fire  produced  a 
short  circuit  in  the  wires  connecting  with  a  part  of  the  building  re- 
mote from  the  fire,  and  that  such  short  circuit  caused  such  a  strain 

178  American   Towing   Co.   v.    German  F.  Ins.  Co.,  74  Md.  25,  21  Atl. 

553   (1891). 


§    222  THE    STANDARD   POLICY.  198 

on  the  machinery  as  to  break  it  to  pieces.  The  fire  occurred  in  the 
wire  tower  of  the  building,  through  which  the  wires  for  electric  light- 
ing were  carried  from  the  building.  It  was  extinguished  without 
contact  with  other  parts  of  the  building,  with  but  slight  damage  to 
the  tower  and  its  contents.  It  was  held  that  the  damage  was  "loss 
or  damage  by  fire"  within  the  meaning  of  a  policy.179  The  court  said : 
"The  subject-matter  of  the  insurance  was  the  building,  machinery, 
dynamos  and  other  electrical  fixtures,  besides  tools,  furniture  and  sup- 
plies used  in  the  business  of  furnishing  electricity  for  electric  light- 
ing. The  defendants,  when  they  made  their  contracts,  understood 
that  the  building  contained  a  large  quantity  of  electrical  machinery 
and  that  electricity  would  be  transmitted  from  the  dynamos,  and 
would  be  a  powerful  force  in  and  about  the  building.  They  must  be 
presumed  to  have  contemplated  such  effects  as  fire  might  naturally 
produce  in  connection  with  the  machinery  used  in  generating  and 
transmitting  strong  currents  of  electricity."  After  considering  the 
general  rule  that  the  active  efficient  cause  that  sets  in  motion  a 
train  of  events  which  brings  about  a  result,  without  the  interven- 
tion of  any  force  started  and  working  actively  from  a  new  and 
independent  source,  is  the  direct  and  proximate  cause,  the  court  said : 
"If  this  was  an  action  against  one  who  negligently  set  the  fire  in 
the  tower  and  thus  caused  the  injury  to  the  machinery,  it  is  clear 
on  the  theory  of  the  plaintiff  that  the  negligent  act  of  setting  the 
fire  would  be  deemed  the  active  efficient  cause  of  the  disruption  of 
the  machinery  and  consequent  injury  to  the  building.  It  remains  to 
inquire  whether  there  is  a  different  rule  in  an  action  on  a  policy  of 
fire  insurance.  *  *  In  suits  brought  on  a  policy  of  fire  insur- 

ance it  is  held  that  the  intention  of  the  defendants  must  have  been  to 
insure  against  losses  where  the  cause  insured  against  was  a  means 
or  agency  in  causing  the  loss,  even  if  it  was  entirely  due  to  some 
other  active  efficient  cause  which  made  use  of  it  or  set  it  in  motion, 
if  the  original  efficient  cause  was  not  itself  made  a  subject  of  separate 
insurance  in  the  contract  between  the  parties.  For  instance,  when  the 
negligent  act  of  the  insured  or  of  anybody  else  causes  a  fire  and  so 
causes  damage,  although  the  negligent  act  is  the  direct,  proximate 
cause  of  the  damage  through  fire,  which  was  the  passive  agency, 
the  insurer  is  held  liable  for  the  loss  caused  by  fire.  This  is 
the  only  particular  in  which  the  rule  in  regard  to  remote  and  proxi- 

179  Lynn,    etc.,    Co.    v.    Meriden    F.     Ins.    Co.;    158    Mass.    570,    Woodruff 
Ins.  Cas.  178   (1893). 


199  AUTHORIZATION'  OF  AGEXT.  §  223 

mate  causes  is  applied  differently  in  actions  on  fire  insurance  pol- 
icies from  the  application  of  it  in  other  actions.  A  failure  some- 
times to  recognize  this  rule  as  standing  on  independent  grounds  and 
established  to  carry  out  the  intention  of  the  parties  to  the  contract 
of  insurance  has  led  to  confusion  of  statement  in  some  of  the  cases. 
The  difficulty  of  applying  the  general  rule  in  complicated  cases  has 
made  the  interpretation  of  some  of  the  decisions  doubtful,  but  on  prin- 
ciple and  by  the  weight  of  authority  in  many  well-considered  cases, 
we  think  it  is  clear  that,  apart  from  the  single  exception  above  stated, 
the  question,  What  is  the  cause  which  creates  a  liability?  is  to  be  de- 
termined in  the  same  way  in  actions  upon  policies  of  fire  insurance  as 
in  other  actions.  *  *  *  In  the  present  case  the  electricity  was 
one  of  the  forces  of  nature,  a  passive  agent  working  under  natural 
laws,  whose  existence  was  known  when  the  insurance  policies  were 
issued.  Upon  the  theory  adopted  by  the  jury,  the  fire  worked  through 
agencies  in  the  building — the  atmosphere,  the  metallic  machinery, 
electricity  and  other  things — and  working  precisely  as  defendants 
would  have  expected  it  to  work  if  they  had  thoroughly  understood  the 
situation  and  laws  applicable  to  the  existing  conditions,  it  put  a  great 
strain  on  the  machinery  and  did  great  damage.  No  new  cause  acting 
from  an  independent  source  intervened.  The  fire  was  the  direct  and 
proximate  cause  of  the  damage  according  to  the  meaning  of  the 
words  'direct  and  proximate'  by  the  best  authorities/' 

//.     Authorization   of  Agent. 

In  any  matter  relating  to  this  insurance,  no  person,  unless  duly 
authorized  in  writing.,  shall  ~b&  deemed  the  agent  of  this  company.180 

§  223.  Agency. — The  subject  of  agency  has  already  been  consid- 
ered. This  clause  attempts  to  make  a  writing  the  only  evidence  of 
agency.  Ordinarily  a  fire  insurance  agent  is  given  a  written  com- 
mission which  in  general  language  defines  his  authority,  but  the  in- 

180  This  provision  is  found  in  the  setts    and    Minnesota.     The    Michi- 

standard  policies  of  New  York,  New  gan     policy     provides     that:       "In 

Jersey,   Connecticut,   Rhode   Island,  any  matter  relating  to  the  procur- 

Louisiana,     Iowa,     North     Dakota,  ing    of    this    insurance,    no    person, 

South  Dakota  and  North  Carolina,  unless  duly  authorized   in   writing, 

The  provision  is  not  found  in  the  shall  be  deemed  the  agent  of  this 

standard    policies    of    Maine,    New  company." 
Hampshire,     Wisconsin,     Massachu- 


§    223  THE    STANDARD   POLICY.  200 

surer  does  not,  by  virtue  of  this  provision  of  the  standard  policy, 
escape  responsibility  for  acts  of  those  who  are  in  fact  its  agents,  al- 
though they  may  not  be  able  to  show  written  authority.  The  rule 
established  by  the  weight  of  authority,  as  stated  by  May,  and  quoted 
with  approval  by  Richards,181  is  that:  "It  makes  no  difference  that 
the  policy  declares  the  agent  to  be  the  agent  of  the  assured  and  not 
of  the  company.  For  whom  a  person  is  acting  is  a  matter  of  law  on 
the  facts  of  every  case.  The  application  precedes  the  policy;  and  to 
hold  that  a  provision  in  the  after-coming  policy,  unknown  to  the  as- 
sured at  the  time  of  the  application,  could  turn  the  insurance  agent 
into  his  agent,  when  he  thought  all  the  time  he  was  dealing  with  him 
and  accepting  his  advice  as  the  agent  of  the  company,  would  be  an 
outrage."  Any  other  rule  would  permit  an  insurance  company  to 
relieve  itself  from  all  responsibility  for  the  mistakes  or  misconduct 
of  its  agents,  by  the  simple  device  of  sending  them  out  without  writ- 
ten authorization.  The  matter  has  been  regulated  by  statute  in 
some  of  the  states,  and  this  provision  of  the  policy  must  be  read  in 
connection  with  such  statutes.  This  clause  may  properly  be  regarded 
as  notice  to  the  insured  that  it  is  unsafe  to  deal  with  a  person  who 
can  not  show  written  authority,  but  agency  is  a  fact,  and  may  be 
proven  by  any  competent  evidence. 

///.     Application  and  Survey. 

If  an  application,  survey,  plan  or  description  of  the  property  be 
referred  to  in  this  policy,  it  shall  be  a  part  of  this  contract  and  a 
warranty  by  the  insured.™2 

181  Richards   Ins.,   171;    Kausal   v.  does  not  appear  in  the  Maine,  Mas- 
Minnesota,  etc.,  Ins.  Ass'n,  31  Minn,  sachusetts,  and  Minnesota  standard 
17,  47  Am.  Rep.  776   (1883);   Allen  policies.     It  does  not  appear  in  the 
v.  German,  etc.,  Ins.  Co.,  123  N.  Y.  New    Hampshire    standard    policy, 
6   (1890);    Insurance  Co.  v.  Norton,  but  chapter  170  of  the  Public  Stat- 
96    U.    S.    234    (1877).     See    §    160,  utes  of   New   Hampshire,   which   is 
supra.  printed  on  the  back  of  the  policy 

182  This  provision  appears  in   the  and  forms  a  part  thereof,  provides 
standard  policies  of  New  York,  New  that:       "Descriptions    of    property 
Jersey,   Connecticut,   Rhode   Island,  and  statements  concerning  its  value 
Wisconsin,   Iowa,   Louisiana,   North  and  the  title  of  the  insured  thereto 
Dakota,    South    Dakota,   and   North  in  an  application  of  insurance  or  in 
Carolina.     Michigan  adds  the  words,  an    insurance    policy    shall    not   be 
"as  to  material  facts."     The  clause  treated  as  warranties." 


201  APPLICATION — SURVEY — MISCONDUCT   OF   INSURED.          §    224 

§  224.  Application  a  part  of  the  policy. — A  reference  in  the  policy 
to  an  application,  survey,  plan  or  description  of  the  property  makes 
it  a  part  of  the  contract  and  warrants  its  correctness.  The  clause  is 
not  contained  in  the  Massachusetts  form,  and  in  that  state  only  such 
parts  of  the  application  as  are  set  forth  in  the  policy  become  a  part 
of  the  contract.  The  language  probably  extends  the  established  rule 
by  making  a  mere  reference  sufficient,  which  was  not  enough  under 
the  earlier  decisions.183  But  the  reference  must  still  be  of  such  a 
character  as  to  show  an  intention  to  incorporate  the  matter  into  the 
contract.  Thus,  the  entire  application  is  not  made  a  part  of  the 
policy  which  contains  this  provision  by  a  statement  in  the  policy  that 
the  property  is  situated  in  a  specified  place,  "as  per  diagram  filed 
with  application,"  where  such  diagram  was  put  on  the  back  of  the 
application  after  it  had  been  signed  by  the  applicant.184 

The  materiality  of  the  matters  thus  warranted  must  be  determined 
by  general  and  statutory  rules,  to  which  reference  has  already  been 
made.185 

IV.     Misconduct  of  Insured  in  Procuring  Policy. 

This  entire  policy  shall  be  void  if  the  insured  has  concealed  or  mis- 
represented, in  writing  or  otherwise,  any  material  fact  or  circum- 
stance concerning  the  insurance  or  the  subject  thereof;  or  if  the  in- 
terest of  the  insured  in  the  property  be  not  truly  stated  herein;  or  in 
case  of  any  fraud  or  false  swearing  by  the  insured  touching  any  mat- 
ter relating  to  this  insurance  or  the  subject  thereof,  whether  before  or 
after  the  loss.iss 

§  225.  Entirety  of  contract. — Under  the  old  forms  there  were  many 
cases  which  held  that  an  insurance  contract  was  severable  where 
distinct  items  were  insured  for  separate  amounts,  although  but 

183Vilas  v.  New  York,  etc.,  Ins.  provision  appears  in  the  standard 

Co.,  72  N.  Y.  590,  28  Am.  Rep.  186  policies  of  Massachusetts,  Minne- 

(1878).  sota,  Maine,  and  New  Hampshire: 

181  La  Belle  v.  Norwich  F.  Ins.  "This  policy  shall  be  void  if  any 

Soc.,  34  N.  B.  (Can.)  515  (1898).  material  fact  or  circumstance 

188  See  §§  116,  119,  supra.  stated    in    writing    has    not    been 

188  This  provision  is  found  in  the  fairly  represented  by  the  insured, 

standard  policies  of  New  York,  New  or  if  the  insured  shall  make  any 

Jersey,  Connecticut,  Rhode  Island,  attempt  to  defraud  the  company 

Wisconsin,  Louisiana,  Iowa,  North  either  before  or  after  the  loss." 

Dakota,  South  Dakota,  Michigan,  Nothing  is  said  concerning  a  mis- 

and  North  Carolina.  The  following  representation  of  interest. 


§    225  THE    STANDARD   POLICY.  202 

one  premium  was  paid.  The  decisions  are  very  conflicting;  but 
probably  the  weight  of  authority  is  to  the  effect  that  such  a  con- 
tract is  entire  and  that  breach  of  a  warranty  which  relates  solely  to 
one  class  of  property  will  avoid  the  entire  policy.lss  Under  this 
provision  of  the  standard  policy  there  is  little  room  for  controversy. 
Where  a  policy  which  covered  a  barn  and  its  contents  contained  a 
provision  that  under  certain  conditions  "this  entire  policy  and  every 
part  thereof  shall  be  void/'  and  there  was  a  misdescription  as  to 
the  amount  of  the  incumbrances,  the  court  said:189  "It  is  urged  by 
the  respondent  that  this  contract  of  insurance  is  severable,  that  the 
insurance  on  the  barn  should  be  deemed  one  contract,  the  insur- 
ance on  its  contents  another  contract,  and  that  a  misstatement  in 
respect  to  the  amount  for  which  the  realty  was  incumbered  does  not 
invalidate  the  insurance  on  the  personalt}',  and  that  defendant,  hav- 
ing asked  the  court  to  rule  that  no  part  of  the  loss  could  be  recovered, 
asked  for  too  much  in  the  instruction  prayed  for  and  in  its  motion  for 
a  nonsuit,  and  that  exceptions  to  these  rulings  are  unavailable.  Under 
forms  of  policies  quite  different  from  the  one  in  the  case  at  bar,  in- 
suring specific  amounts  on  separate  items  of  property,  contracts  have 
been  held  severable.  It  is  expressly  stipulated  in  this  policy  that  if 
either  the  real  or  personal  property  or  any  part  of  it  be  incumbered  it 

187  Taylor  v.  Anchor,  etc.,  Ins.  Co.  are  therein  insured,  and  though  the 
(Iowa),   88  N.  W.   807    (1902),   and  stipulation    violated    relates    solely 
cases  there  cited;    Merrill  v.   Agri-  to  a   matter   which   could   have   no 
cultural,  etc.,  Ins.  Co.,  73  N.  Y.  452  connection    with   but   one   of   these 
(1878);    Schuster    v.    Dutchess    Co.  classes." 

Ins.  Co,  102  N.  Y.  260  (1880).     As  to  1SO  Smith  v.  Agricultural  Ins.  Co., 

the  severability  of  contracts  of  in-  118    N.    Y.    518     (1890);     Geiss    v. 

surance,  see  note  to  Wright  v.  Lon-  Franklin     Ins.     Co.,     123     Ind.     172 

don  F.  Ins.  Ass'n   (Mont.),  19  L.  R.  (1889).    In  Pratt  v. Dwelling  House, 

A.  211  (1893).  etc.,  Ins.  Co.,  130  N.  Y.  206   (1891), 

188  In     Southern     F.     Ins.     Co.     v.  the     court    said:       "Whatever    the 
Knight,  111  Ga.  622,  78  Am.  St.  216  rule    may    be    elsewhere,    it    is    set- 
(1900),  after  a  review  of  many  cases,  tied     in     this     state     that     where 
the  court  said:     "Our  conclusion  is,  insurance    is    made    upon    different 
that  where  an  insurance  policy   is  kinds  of  property,   each   separately 
issued  in  consideration  of  a  gross  valued,    the    contract    is    severable, 
premium,    and    provides    that    the  even   if  but  one  premium   is  paid, 
policy  shall  be  void  in  the  event  of  and  the  amount  insured  is  the  sum 
a  certain  condition  therein  named,  total  of  the  valuations."    See  Loom- 
and  this  condition  is  broken,  no  re-  is  v.  Rockford  Ins.  Co.,  77  Wis.  87 
covery   can   be   had   on   the   policy,  (1890);    McQueeny  v.   Phrenix   Ins. 
though  separate  classes  of  property  Co.,  52  Ark.  257  (1889). 


203 


MISCONDUCT  IN  PROCURING  POLICY. 


225 


must  be  so  represented  to  the  company  in  the  application,  otherwise 
the  entire  policy  and  every  part  of  it  shall  be  void.  This  policy  is 
quite  different  in  its  legal  effect  from  those  considered  in  the  cases 
cited,  it  not  being  expressly  provided  in  those  policies  as  in  this  that 
a  misrepresentation  of  the  situation  of  one  of  the  subjects  insured 
should  invalidate  the  insurance  on  all  other  property  covered  by  the 
policy."  In  Missouri  it  was  held  that  the  clause  making  the  "entire 
policy  void,  in  case  of  breach  of  condition  in  any  respect,"  does  not 
render  the  policy  indivisible  so  as  to  preclude  any  recovery  on  it 
in  case  it  is  for  convenience  made  to  cover  different  kinds  of  prop- 
erty which  are  separately  valued,  although  but  one  premium  is  paid. 
The  court  said:190  "When  this  contract  was  made  it  was  the  settled 


i9o  Trabue  v.  Dwelling  House  Ins. 
Co.,  121  Mo.  75,  23  L.  R.  A.  719 
(1894).  In  McGowan  v.  People's, 
etc.,  Ins.  Co.,  54  Vt.  211,  Woodruff 
Ins.  Gas.  205  (1881),  it  appeared 
that  the  policy  covered  both  real 
and  personal  property.  The  real 
estate  was  conveyed  in  violation  of 
a  condition  in  the  policy  and  it  was 
claimed  that  this  did  not  affect  the 
insurance  upon  the  personal  prop- 
erty which  was  situated  in  the 
dwelling  house  insured.  The  court 
said:  "This  is  a  question  of  great 
practical  importance,  as  a  large  pro- 
portion of  insurance  contracts  em- 
brace more  than  one  item  of  prop- 
erty insured.  The  decisions  are  ap- 
parently conflicting;  but  we  think 
are  easily  reconciled  by  referring 
to  the  plain  principles  which  should 
govern  them.  The  general  rule, 
'void  in  part,  void  in  toto.'  should 
apply  to  all  cases  where  the  con- 
tract is  affected  by  some  all-per- 
vading vice,  such  as  fraud  or  some 
unlawful  act,  condemned  by  public 
policy  or  the  common  law;  cases 
where  the  contract  is  entire  and  not 
divisible;  and  all  those  cases  where 
the  matter  that  renders  the  policy 
void  in  part,  and  the  result  of  its 
being  so  rendered  void,  affects  the 
risk  of  the  insurer  upon  the  other 


items  in  the  contract.  Keeping 
these  rules  in  mind,  the  leading 
cases  on  this  subject  can  all  be  rec- 
onciled. A  recovery  should  be  had 
in  all  those  cases  where  the  con- 
tract is  divisible;  the  different  prop- 
erties insured  for  separate  sums; 
and  the  risk  upon  the  property, 
which  is  claimed  to  be  valid,  unaf- 
fected by  the  cause  that  renders 
the  policy  void  in  part.  Such 
are  the  cases  of  Howard,  etc.,  Ins. 
Co.  v.  Cornick,  24  111.  455  (1860); 
Hartford  F.  Ins.  Co.  v.  Walsh,  54 
111.  164  (1870);  Clark  v.  New  Eng- 
land, etc.,  Ins.  Co.,  6  Cush.  (Mass.) 
342  (1850);  Date  v.  Gore,  etc.,  Ins. 
Co.,  14  Up.  Can.  C.  P.  548  (1864); 
Phrenix  Ins.  Co.  v.  Lawrence,  4 
Mete.  (Ky.)  9  (1862);  Loehner  v. 
Home,  etc.,  Ins.  Co.,  17  Mo.  247 
(1852);  Koontz  v.  Hannibal,  etc., 
Ins.  Co..  42  Mo.  126  (1868);  Cucullu 
v.  Orleans  Ins.  Co.,  9  Mar.  (La.)  6. 
The  cases  following  have  held  the 
contract  entire, — indivisible,  and 
no  recovery  could  be  had  upon 
them:  Hinman  v.  Hartford  F.  Ins. 
Co.,  36  Wis.  159  (1874);  Associated 
F.  Ins.  Co.  v.  Assum,  5  Md.  165 
(1853);  Bowman  v.  Franklin  F.  Ins. 
Co.,  40  Md.  620  (1874);  Fire  Ass'n  v. 
Williamson,  26  Pa.  St.  196  (1856); 
Gottsman  v.  Pennsylvania  Ins.  Co., 


§    226  THE   STANDARD   POLICY.  204 

rule  of  decision  in  this  state  that  such  a  contract  as  this  was  divisible 
or  severable,  although  the  policy  had  a  clause  which  would  avoid  the 
whole  contract.  The  addition  of  the  word  'entire'  given  its  utmost 
latitude  could  not  avoid  any  more  than  the  whole  policy;  hence  it 
added  nothing  to  the  policy." 

§  226.  Concealment  and  misrepresentation. — This  clause  makes  no 
changes  in  the  general  rules  governing  the  effect  of  concealment  and 
misrepresentation.  It  simply  declares  the  existing  law,  an.d  its  only 
importance  here  is  in  connection  with  the  evident  intention  that  the 
contract  shall  not  be  treated  as  severable,  but  that  the  entire  policy 
shall  be  rendered  void  by  concealment  or  misrepresentation  in  con- 
nection with  any  material  matter.191 

§  227.  Statement  of  interest. — In  the  absence  of  any  provision  re- 
quiring a  statement  of  the  interest  of  the  insured,  the  extent  and 
nature  of  such  interest  need  not  be  disclosed,  and  it  will  be  sufficient 
for  him  to  show  an  insurable  interest  at  the  time  of  the  loss.192  The 
applicant  may  state  simply  that  he  is  the  owner  if  this  is  true  in  any 
substantial  sense.193  This  clause  does  not  require  the  applicant  to 
state  the  value  of  his  interest  or  whether  it  is  subject  to  incumbrances 
or  liable  to  be  terminated.194  The  word  "interest"  is  broader  than 
title.195. 

§  228.  Fraud  and  false  swearing. — The  entire  policy  is  rendered 
void  by  fraud  or  false  swearing  either  before  or  after  the  loss.  But 
mere  mistake  in  the  expression  of  an  opinion,  or  an  innocent  mis- 
statement,  will  not  work  a  forfeiture  under  this  provision.  It  must 

56  Pa.  St.  210   (1867);    Bleakley  v.  m  See  ch.  vi. 

Niagara,    etc.,    Ins.    Co.,    16    Grant  192  See    §    45,    supra;    Buffum    v. 

(Up.  Can.)  198  (1869).    In  the  case  Bowditch,    etc.,    Ins.    Co.,    10    Gush. 

at  bar  the  whole  property  was  in-  (Mass.)  540  (1852). 

sured  for  $872,  divided  into  specific  m  Wainer  v.  Milford,  etc.,  Ins.  Co., 

items,   but  one   premium  was  paid  153  Mass.  335  (1891). 

and  one  premium  note  given.     We  m  Dolliver  v.  St.  Joseph,  etc.,  Ins. 

think  the  authorities  justify  us  in  Co.,  128  Mass.  315,  35  Am.  Rep.  378 

holding  that  the   contract  was   an  (1880);   Carson  v.  Jersey  City,  etc., 

entire    one;     separate    and    distinct  Ins.  Co.,  43  N.  J.  L.  300,  39  Am.  Rep. 

only  so  far  as  to  limit  the  extent  584  (1881). 

of  the  risk  assumed  by  the  company  1M  Lee  v.  Agricultural  Ins.  Co.,  79 

on  each  kind  of  property."  Iowa  379   (1890). 


205  MISCONDUCT   IN    PROCURING   POLICY.  §    228 

be  false  and  fraudulent.196  Thus,  a  false  statement  as  to  the  value  of 
the  property  will  not  invalidate  the  policy  if  given  in  good  faith  and 
as  an  honest  expression  of  opinion.197  A  concealment  or  misstate- 
ment  relative  to  the  value  of  the  property  is  sometimes  held  to  be 
immaterial  where  the  policy  is  not  valued.  Thus,  in  one  case  it  was 
said:  "By  the  terms  of  the  policies  it  is  expressly  provided  that  the 
companies  were  not  liable  beyond  the  actual  cash  value  of  the  property 
at  the  time  of  the  loss.  The  policies  were  not  valued,  but  were  open 
policies,  and  the  companies  were  liable  only  for  the  actual  value  of  the 
property  lost.  In  such  policies  an  overvaluation  of  the  property  is 
immaterial.  If  such  representation  in  such  a  policy  is  not  material 
to  the  risk,  does  not  increase  the  risk  in  any  way,  we  fail  to  see 
any  reason  for  saying  that  because  the  insured  was  at  the  time  the 
company's  agent,  such  representation  by  him  was  material."198  Over- 
valuation, however  great,  is  not  conclusive  evidence  of  fraud.  It  is 
at  the  most  merely  presumptive  evidence  of  fraudulent  intent  and  is 
strong  in  proportion  to  the  excess.199  Thus,  where  there  was  testi- 
mony that  misstatements  in  the  proof  were  made  by  mistake,  it  was 
held  error  to  take  the  case  from  the  jury,  as  the  policy  was  only  ren- 
dered void  by  willful  false  swearing  with  the  intent  to  defraud.200 
Where  the  policy  contained  a  warranty  and  provided  that  "false 
representations  by  the  assured  of  the  conditions,  situation,  or  occu- 
pancy of  the  property  or  any  omission  to  make  known  any  fact  ma- 
terial to  the  risk,  or  any  overvaluation  or  misrepresentation  whatever, 
either  in  the  written  application  or  otherwise,  shall  make  the  policy 
void/'  it  appeared  that  there  was  a  clear  overvaluation,  and  thus  a 
breach  of  warranty.  The  court  said:201  "The  trial  court  erred  in 
submitting  the  question  of  overvaluation  simply  as  one  of  fraud  or 
good  faith,  and  in  stating  to  the  jury  that  if  the  applicant  placed  a 
value  on  the  property  which  he  honestly  believed  to  be  its  legitimate 

196  Titus  v.  Glens  Falls,  etc.,  Ins.  v.  Coombs,  19  Ind.  App.  331,  49  N. 
Co.,  81  N.  Y.  410  (1880).  E.  471  (1898). 

197  Baker  v.  State  Ins.  Co.,  31  Ore.        20°  Petty  v.  Mutual  F.  Ins.  Co.,  Ill 
41,  48  Pac.  699  (1897);  Phenix  Ins.  Iowa  358,  82  N.  W.  767  (1900). 

Co.  v.  Pickel,  119  Ind.  155,  21  N.  E.  201  Fowler  v.  ^Btna  F.  Ins.  Co.,  6 

546   (1889).  Cow.    (N.   Y.)    673    (1827),    16   Am. 

198  Insurance  Co.  v.  Osborn,  26  Ind.  Dec.  460  and  note;  Boutelle  v.  West- 
App.  88,  59  N.  E.  181  (1901).  Chester  F.  Ins.  Co.,  51  Vt.  4,  31  Am. 

199  Sturm  v.  Atlantic,  etc.,  Ins.  Co.,  Rep.  666    (1878);    Carson  v.  Jersey 
63  N.  Y.  77    (1875);    Insurance  Co.  City  F.  Ins.  Co.,  14  Vroom   (N.  J.) 

300,  39  Am.  Rep.  584   (1881). 


§    228  THE    STANDARD    POLICY.  206 

value,  it  would  not  render  the  policy  void,  although  larger  than  the 
value  of  the  property  as  estimated  by  others.  Doubtless  a  very  slight 
variation  should  be  disregarded,  but  I  think  the  applicant  must  be 
held  responsible  for  any  substantial  excess  when  he  thus  warrants  the 
value."  Under  this  provision  of  the  standard  policy  it  is  held  in 
Michigan  that  the  contract  is  not  necessarily  avoided  because  of  a  false 
statement  in  the  affidavit,  given  by  the  assured  after  the  loss,  that  a 
sewing  machine  was  burned,  which  he  explained  by  saying  that  he 
thought  it  was  burned  at  the  time  he  made  the  affidavit,  but  subse- 
quently found  it  was  not  in  the  building.202  Where  the  policy  con- 
tained a  provision  that  any  fraud  or  false  swearing  should  forfeit  all 
claims  under  it,  and  the  plaintiff  in  his  proofs  of  loss  stated  under 
oath  that  the  building  was  occupied  as  a  dwelling  house  and  for  no 
other  purpose,  the  words  were  held  to  mean  a  verified  false  assertion, 
fitted  and  likely  to,  and  which  does,  deceive.203  But  it  appeared  that 
the  defendant,  through  its  agents  and  secretary,  knew  the  facts  ;  and  as 
the  words  used,  when  charged  with  the  meaning  given  them  by  the  par- 
ties, were  not  true  as  between  them,  there  was  no  breach  of  the  condi- 
tion. The  defendant  could  not  be  deceived  by  an  assertion  which  to  its 
own  knowledge  was  false.  Under  this  provision,  false  swearing  in  the 
proofs  of  loss  in  regard  to  the  burning  of  wearing  apparel,  which 
has  been  removed  from  the  building  insured  before  the  loss,  renders 
the  policy  void  as  to  insurance  on  the  house  and  household  furniture 
as  well  as  that  on  the  wearing  apparel.204 

V.    Excluded  Risks. 

This  company  shall  not  be  liable  for  loss  caused  directly  or  in- 
directly by  invasion,  insurrection,,  riot,  civil  war  or  commotion,  or 
military  or  usurped  power,  or  by  order  of  any  civil  authority,  or  by 
theft;  or  by  neglect  of  the  insured  to  use  all  reasonable  means  to 
save  and  preserve  the  property  at  and  after  a  fire  or  when  the  prop- 
erty is  endangered  by  fire  in  neighboring  premises;  or  (unless  fire 
ensues,  and,  in  that  event,  for  the  damage  by  fire  only)  by  explosion 
of  any  kind,  or  lightning;  but  liability  for  direct  damage  by  light- 
ning may  be  assumed  by  specific  agreement  hereon. 

If  a  building  or  any  part  thereof  fall,  except  as  the  result  of  fire, 


v.   National   F.   Ins.   Co.,        2<*  Fowler  v.  Phoenix  Ins.  Co.,  35 
107  Mich.  323,  65  N.  W.  228   (1895).     Ore.  559,  57  Pac.  421  (1899). 

203Maher  v.  Hibernia  F.  Ins.  Co., 
67  N.  Y.  283  (1876). 


207  EXCLUDED    RISKS.  §    229 

all  insurance  by  this  policy  on  such  building  or  its  contents  shall  im- 
mediately cease.     *     *     * 

Nor.,  beyond  the  actual  value  destroyed  by  fire,  for  loss  occasioned 
by  ordinance  or  law  regulating  construction  or  repair  of  buildings, 
or  by  interruption  of  business,  manufacturing  processes,  or  other- 
wise?®5 

§  229.  Invasion,  riot,  etc. — An  invasion  is  the  hostile  entrance 
of  an  armed  force  into  a  certain  territory,  and  any  loss  to  the  insured 
property  of  which  the  invasion  is  the  efficient  cause  is  not  within 
the  protection  of  the  policy.206  There  can  be  no  recovery  in  such 
case,  although  the  commanding  officer  of  the  invading  party  did  not 
order  the  property  destroyed.207  An  insurrection  is  a  "seditious 
rising  against  the  government ;  a  rebellion ;  a  revolt."208  A  riot  is  an 
unlawful  act  done  or  attempted  to  be  done  by  three  or  more  persons, 
either  with  or  without  common  cause,  or  it  may  be  a  lawful  act  done 
in  a  violent  or  tumultous  manner.  It  is  immaterial  whether  or  not 
there  is  a  previous  unlawful  assembly,  or  whether  the  rioters  originally 
assembled  for  a  lawful  purpose.  Force  or  violence,  or  some  acts 
tending  thereto,  calculated  to  cause  terror  to  one  or  more,  are  neces- 
sary in  criminal  law,  although  there  may  be  a  riot  without  actual 
violence.  In  insurance  cases  it  is  not  necessary  to  first  establish  the 
fact  of  a  riot  by  a  judgment  of  a  criminal  court.209 

200  These  provisions  are  found  in  explosions  of  any  kind   unless  fire 

the  standard  policies  of  New  York,  ensues,    and    then    that    caused    by 

New     Jersey,     Connecticut,     Rhode  fire  only."     They  also  provide  that 

Island,  Wisconsin,  Louisiana,  Iowa,  if v  "the  insured  property  be  exposed 

North  Dakota,  South  Dakota,  Mich-  to  loss  or  damage  by  fire,   the   in- 

igan,    and    North    Carolina.       The  sured  shall  make  all  reasonable  ef- 

standard  policies  of  Massachusetts,  forts  to  save  and  protect  the  same." 

Minnesota,   Maine  and  New  Hamp-  20°  ^tna   F.   Ins.   Co.  v.   Boon,   95 

shire  insure  against  all  loss  or  dam-  U.   S.  117    (1877);    Portsmouth  Ins. 

age   by   fire    originating   from   any  Co.    v.    Reynolds,    32    Gratt.    (Va.) 

cause  except  "invasion,  foreign  ene-  613   (1880). 

mies,  civil  commotions,  riots  or  any  207  Barton    v.    Home    Ins.    Co.,    42 

military    or    usurped    power    what-  Mo.  156,  97  Am.  Dec.  329  (1868). 

ever;    the   amount   of   said   loss   or  208  Spruill  v.  North  Carolina,  etc., 

damage  to   be   estimated   according  Ins.  Co.,  1  Jones  (N.  C.)  126  (1853). 

to  the  actual  value  of  the  insured  209  Joyce  Ins.,  §  2581;  LycomingF. 

property    at    the    time    when    such  Ins.  Co.  v.  Schwenk,  95  Pa.  St.  89, 

loss  or  damage  happens,  but  not  to  40  Am.  Rep.  629   (1880);   Germania 

include  loss  or   damage   caused   by  F.  Ins.  Co.  v.  Deckard,  3  Ind.  App. 


§    229  THE    STANDAKD   POLICY.  208 

The  form  of  policy  excepts  the  risks  of  civil  war  or  commotion. 
Lord  Mansfield  says  that  the  words  "civil  commotion"  were  intro- 
duced in  1727,  and  are  as  general  and  untechnical  as  any  that  can 
possibly  be  used.  He  distinguishes  between  civil  commotion  and 
invasion  by  usurped  military  power  and  says:  "I  think  a  civil  com- 
motion is  this:  an  insurrection  of  the  people  for  a  general  purpose, 
though  it  may  not  amount  to  a  rebellion  while  there  is  usurped 
power."210 

"Usurped  power"  may  mean  an  invasion  from  abroad  or  internal 
authority  conducted  by  authority,  and  not  the  power  of  a  common 
mob.211 

A  loss  caused  by  the  burning  of  a  bridge  by  the  order  of  the  mili- 
tary authorities  to  prevent  the  advance  of  an  armed  force  of  rebels 
is  not  excepted  by  the  clause,  "loss  by  fire  occasioned  by  mobs  or 
riots,"  although  it  would  be  within  other  clauses  of  this  provision.212 

A  policy  contained  a  provision  that  the  company  "shall  not  be 
liable  to  make  good  any  loss  or  damage  by  fire  which  may  happen  or 
take  place  by  means  of  any  invasion,  insurrection,  riot,  or  civil  com- 
motion, or  of  a  military  or  usurped  power."  A  certain  town  in  Mis- 
souri was  attacked  by  a  Confederate  military  force;  and  an  officer  in 
command  of  the  United  States  forces,'  after  a'  battle  had  been  in 
progress  for  some  time,  being  unable  to  successfully  defend  the  city, 
set  fire  to  some  military  stores  to  prevent  them  from  falling  into 
the  hands  of  the  enemy.  The  fire  spread  through  two  intermediate 
buildings  to  the  store  containing  the  insured  goods,  and  they  were 
destroyed.  The  Connecticut  court  held  that  the  clause  did  not  refer 
to  the  lawful  acts  of  military  authorities,  but  only  to  acts  of  persons 
in  hostility  to  the  lawful  authorities,  and  that  the  act  of  the  com- 
mander in  ordering  the  firing  of  the  building  was  a  lawful  act  and 

361,  28  N.  B.  868    (1891);    State  v.  Boon,    95    U.    S.    117     (1877).      In 

Dean,    71   Wis.    678,    38    N.    W.    341  Strauss  v.  Imperial  F.  Ins.  Co.,  94 

(1888).  Mo.  182,  4  Am.  St.  368   (1887),  the 

210  Langdale  v.  Mason,  reported  in  words  "notorious  resistance  to  law- 
2  Marsh.  Ins.  (ed.  1810)  791.  ful  authority"  were  held   to   mean 

211  Drinkwater   v.    London    Assur.  such  an  unusual  and  extraordinary 
Corp.,  2  Wilson  363  (1767);  City  F.  state   of   affairs   that  the   ordinary 
Ins.   Co.  v.   Corlies,   21   Wend.    (N.  civil  authorities  were  overpowered. 
Y.)    367    (1839);    Barton    v.    Home  212  Harris   v.   York,   etc.,    Ins.   Co., 
Ins.  Co.,   42  Mo.   156,   97  Am.   Dec.  50  Pa.  St.  341  (1865). 

329    (1868);    ^Etna    F.    Ins.    Co.    v. 


209  EXCLUDED   RISKS.  §    230 

not  within  the  exception  of  the  policy.213  But  the  Supreme  Court 
of  the  United  States  held  that  the  fire  Avhich  destroyed  the  goods  was 
excepted  from  the  risk  assumed.  Mr.  Justice  Strong  said:214  "The 
general  purpose  of  this  proviso  is  clear  enough,  but  there  is  a  contro- 
versy respecting  the  extent  of  the  exemption  made  by  it.  It  has  been 
very  strenuously  argued  that  the  words  'military  or  usurped  power* 
must  be  construed  as  meaning  military  and  usurped  power;  that  they 
do  not  refer  to  military  power  of  the  government,  lawfully  exercised, 
but  to  usurped  military  power,  either  that  exerted  by  an  invading  for- 
eign enemy  or  b}r  an  internal  armed  force  in  rebellion,  sufficient  to  sup- 
plant the  laws  of  the  land  and  displace  the  constituted  authorities. 
There  is,  it  must  be  admitted,  considerable  authority  and  no  less 
reason  in  support  of  this  interpretation.  In  our  view  of  the  present 
case,  however,  we  are  not  called  upon  to  affirm  positively  that  such 
is  the  true  meaning  of  the  words  in  the  connection  in  which  they  were 
used  in  the  policy  now  under  review;  for  if  it  be  conceded  that  it  is, 
we  are  still  of  opinion  that  the  fire  which  destroyed  the  premises 
of  the  plaintiffs  below  'happened,'  'took  place,'  or  occurred  by 
means  of  a  risk  excepted  in  the  policy.  In  other  words,  it  was 
caused  by  'invasion/  and  the  usurped  military  power  of  a  rebellion 
against  the  government  of  the  United  States,  as  the  contracting 
parties  understood  the  terms  'invasion'  and  'military  or  usurped 
power.' " 

§  230.  Theft. — This  provision,  which  excepts  loss  by  theft,  is  bind- 
ing.215 Where  there  is  no  such  provision  an  insurer  against  fire  only 
is  liable  for  goods  stolen  during  their  removal  to  avoid  impending 
loss  by  an  adjoining  fire.  A  clause  to  the  effect  that  the  company 
"will  not  be  liable  for  damage  to  goods  contained  in  show  windows, 
when  the  damage  is  caused  by  a  light  in  the  window,  nor  shall  the 
company  be  liable  for  loss  by  theft,"  applies  only  to  theft  from  the 
windows,  and  not  theft  occurring  while  the  property  is  necessarily 
being  removed  to  avoid  fire.216 

Where  it  was  provided  that  "in  case  of  fire  or  of  loss  or  damage 
thereby  it  should  be  the  duty  of  the  assured  to  use  his  best  endeavors 

213  Boon  v.  ^Etna  F.  Ins.  Co.,  40  21°  Liverpool,  etc.,  Ins.  Co.  v. 
Conn.  575  (1874).  Creighton,  51  Ga.  95  (1874). 

2M  ^Etna  F.  Ins.  Co.  v.  Boon,  95  216  Leiber  v.  Liverpool,  etc.,  Ins. 
U.  S.  117  (1877).  Co.,  6  Bush  (Ky.)  639  (1869). 

14 — ELLIOTT  INS. 


§    231  THE    STANDARD   POLICY.  210 

for  saving  and  preserving  the  property,"  it  was  held  that  the  com- 
pany was  liable  for  the  value  of  the  goods  lost  or  stolen  in  the  process 
of  removal  in  accordance  with  this  provision.217  Where  the  policy 
made  it  the  duty  of  the  insured  to  "use  all  diligence  in  the  removal 
and  preservation  of  the  property,  and,  in  case  of  failure  on  his  part 
so  to  do,  the  company  would  not  be  liable  for  loss  or  damage  sus- 
tained in  consequence  of  such  neglect,"  and  while  complying  with 
this  provision  there  was  a  loss  by  theft,  it  was  held  that  there  was  no 
liability  on  the  part  of  the  company  for  the  loss  under  the  provision 
that  "this  company  shall  not  be  liable  to  make  good  any  loss  by  theft ; 
or  any  loss  or  damage  by  fire. which  may  happen  or  take  place  by  means 
of  any  invasion,  insurrection,  riot,  or  civil  commotion,  or  any  military 
or  usurped  power."  The  clause  relating  to  theft  was  treated  as  an 
independent  provision.218 

§  231.  Neglect  to  protect  property. — Unless  expressly  provided  to 
the  contrary,  a  policy  covers  damage  occasioned  by  the  negligence  of 
the  insured  or  his  representatives.  This  provision  imposes  upon  him 
the  duty  to  use  reasonable  care  to  save  and  preserve  the  property  at 
and  after  a  fire,  or  when  the  property  is  endangered  by  fire  existing 
in  the  neighborhood.  In  a  case  where  the  policy  contained  a  similar 
provision,  and  it  was  alleged  that  the  loss  was  occasioned  by  the 
"neglect  to  use  all  possible  efforts  by  the  plaintiff  to  save  and  pre- 
serve the  property  when  exposed  to  fire,"  it  was  held  error  to  refuse 
a  request  that  plaintiffs  could  not  recover  for  any  loss  or  damage  oc- 
casioned by  their  or  either  of  their  neglect  to  use  all  possible  efforts 
to  save  or  preserve  the  property  when  on  fire  or  exposed  thereto.  It 
was  said  that  the  request  "was  almost  in  the  precise  words  of  the 
condition,  and  although  the  condition  was  not  set  up  in  the  answer 
as  a  defense,  the  issue  had  been  tendered  in  the  complaint  as  to  its 
breach  and  the  question  was  one  which  affected  the  amount  of  dam- 
ages to  be  recovered  even  if  the  defendant  failed  to  sustain  his  de- 
fense to  the  action."219 

§  232.  Explosion. — In  the  absence  of  a  provision  imposing  liability 
there  has  been  much  conflict  of  authority  as  to  the  liability  of  the 

217  Independent,    etc.,    Ins.    Co.    v.  Co.,    14    Mo.    3    (1851).       See,    also, 
Agnew,  34  Pa.  St.  96    (1859).     See,  Witherell  v.  Maine  Ins.  Co.,  49  Me. 
also,  Tilton  v.  Hamilton  F.  Ins.  Co.,  200      (1861);      Fernandez     v.     Mer- 
14    How.    Pr.    (N.    Y.)    363    (1857);  chants',   etc.,   Ins.   Co.,   17   La.  Ann. 
Newmark    v.    Liverpool,    etc.,    Ins.  131   (1865). 

Co.,  30  Mo.  160  (1860).  -">  Ellsworth  v.  ^Etna  Ins.  Co.,  89 

218  Webb    v.    Protection,    etc.,    Ins.     N.  Y.  186  (1882). 


211  EXCLUDED    RISKS.  §    232 

insurer  for  loss  caused  by  a  fire  which  results  from  an  explosion. 
In  the  leading  early  case  in  New  York  the  policy  contained  a  condi- 
tion that  the  insurer  should  not  be  liable  for  loss  caused  by  the  ex- 
plosion of  a  steam  boiler.  As  a  result  of  explosion  fire  was  brought 
in  contact  with  the  insured  property,  which  was  consumed.  It  was 
held  that  the  loss  was  within  the  exception  and  that  the  company 
was  not  liable.220  The  same  conclusion  was  reached  in  Ohio  under 
slightly  different  form  of  policy.  It  appeared  that  an  inflammable 
vapor  was  formed  in  the  course  of  the  business  of  rectifying  spirits, 
which  came  in  contact  with  an  ordinary  gas  jet  and  resulted  in  an 
explosion,  which  was  followed  by  fire.220a  A  later  case  in  the  same 
state  would  seem  to  be  in  conflict,  but  the  court  attempts  to  make  a 
distinction  between  the  two  cases.221 

So,  the  United  States  Supreme  Court  held  that  under  a  similar 
exemption  there  was  no  liability  where  the  explosion  took  place  in  a 
building  across  the  street  which  resulted  in  an  extensive  fire,  which 
destroyed  several  blocks  of  buildings,  including  the  warehouse  in 
which  the  insured  property  was  stored.  The  court  said:222  "The 
only  question  was  whether  the  fire  happened  or  took  place  by  means 
of  the  explosion,  for  if  it  did  the  defendant  was  not  liable  by  the 
express  terms  of  the  policy." 

The  contrary  rule  has  been  established  in  Illinois223  and  Penn- 

220  St.  John  v.  American,  etc.,  Ins.  fire  and  an  explosion  had  occurred 
Co.,  11  N.  Y.  516    (1854).     In  Hay-  in  the  course  of  the  conflagration, 
ward  v.  Liverpool,  etc.,  Ins.  Co.,  3  the  rule  might  have  been  different. 
Keyes  (N.  Y.)  456  (1867),  the  policy  So  in  Mitchell  v.  Potomac  Ins.  Co. 
expressly  excepted  liability  for  sub-  (U.    S.),    22    Sup.    Ct.    22    (1901),   a 
sequent   fire.      In    Briggs   v.    North  lighted   match  which  came  in  con- 
American,   etc.,    Ins.    Co.,   53   N.   Y.  tact  with   a   vapor   and   caused   an 
446    (1873),    under   a   policy   which  explosion   was   not  a   "fire"   within 
contained  the  standard  clause,  it  ap-  the  meaning  of  a  policy  which  ex- 
peared  that  vapor  from  the  works  eludes  liability  for  explosion, 
came  in  contact  with  the  flame  of  220a  United,  etc.,  Ins.  Co.  v.  Poote, 
a   lamp,    and    an    explosion    ensued  22  Ohio  St.  340  (1872). 
which   nearly   destroyed   the   build-  221  Boatman's,  etc.,  Ins.  Co.  v.  Par- 
ing and  machinery.    A  fire  resulted  ker,  23  Ohio  St.  85  (1872). 
which  caused  some  damage,   slight  222  Insurance  Co.  v.  Tweed,  7  Wall, 
when    compared    with    that    caused  (U.  S.)  44  (1868). 
by  the  explosion,  and  it  was  held  m  Commercial   Ins.   Co.  v.  Robin- 
that   the    company    was   not   liable  son,    64    111.    265    (1872);    Heuer  v. 
for  the   loss   caused   by   the   explo-  North-Western,    etc.,    Ins.    Co.,    144 
sion.      It   was   suggested,    however,  111.  393  (1893). 
that  if   the   building   had   been   on 


§    232  THE    STANDARD   POLICY.  212 

sylvania.224  In  the  latter  state  it  was  said:  "Careful  examination 
of  the  question  convinces  me  that  the  exception  covered  by  this  section 
is  to  be  restricted  to  losses  arising  from  explosions  rather  than  ex- 
tended to  the  much  broader  ground  of  losses  by  fire  originating  from 
explosions." 

Where  the  policy  excluded  liability  for  damage  caused  by  explo- 
sion, it  was  held  that  there  was  no  liability  where  powder  in  another 
building  was  struck  by  lightning  and  the  insured  house  was  de- 
stroyed.225 "The  conclusions  stated/'  said  the  court,  "are  sustained 
by  abundant  authority.  True  it  is  that  cases  are  to  be  found  which 
declare  principles  of  construction  which,  if  applied  here,  would  make 
the  company  liable  for  this  loss  if  its  liability  were  measured  wholly 
by  the  lightning  clause,  but  in  no  case  which  has  come  under  our 
observation,  and  we  have  examined  a  great  many,  has  liability  been 
found  to  attach  where  there  was  a  provision  excluding  liability  for 
loss  by  explosion  and  the  loss  was  caused  by  fire,  or  as  here  by  light- 
ning taking  effect  in  a  distant  building,  and  the  damage  being  wrought 
to  the  insured  property  by  an  explosion  produced  by  the  fire  or  light- 
ning without  either  of  the  latter  agencies  coming  in  contact  with  the 
property." 

The  standard  form  provides  for  liability  for  damages  occasioned 
by  fire  which  results  from  explosion,  and  exempts  the  insurer  from 
liability  for  damages  caused  by  the  explosion  itself.  The  loss  by 
explosion  must  be  distinguished  from  that  caused  by  the  subsequent 
fire.226  Under  this  provision  the  insurer  is  liable  for  the  loss  where 
the  explosion  is  the  result  of  an  antecedent  fire.227  Damage  to  prop- 
erty resulting  immediately  from  an  explosion  of  gunpowder  caused 
by  the  application  of  fire  is  within  the  provision  of  the  policy  which 
exempts  the  company  from  liability  for  loss  caused  by  explosion 
unless  fire  ensues,  and  then  only  for  loss  or  damage  by  fire.228 

^Heffron  v.  Kittanning  Ins.  Co.,  field,    etc.,    Ins.    Co.,    53    Wis.    129 

132  Pa.  St.  580,  20  Atl.  698   (1890).  (1881),   56  Wis.  96    (1882);    Smiley 

225  German  F.  Ins.  Co.  v.  Roost,  55  v.   Citizens'  Ins.  Co.,  14  W.  Va.  33 

Ohio  St.  581,  45  N.  E.  1097,  60  Am.  (1878). 
St.  711   (1897).  ^Washburn  v.  Miami  Valley  Ins. 

^Briggs    v.    North    British,    etc.,  Co.,  2  Fed.  633  (1880).     See  Waters 

Ins.    Co.,     66     Barb.     (N.    Y.)     325  v.  Merchants',  etc.,  Ins.  Co.,  11  Pet. 

(1872);   Briggs  v.  North  American,  (U.  S.)  213   (1837). 
etc.,  Ins.  Co.,  53  N.  Y.  446    (1873).         228  Phoenix    Ins.    Co.    v.    Greer,    61 

See  generally,  Transatlantic  F.  Ins.  Ark.  509,  33  S.  W.  840  (1896).     See 

Co.  v.   Dorsey,   56   Md.   70,   40   Am.  Mitchell  v.  Potomac  Ins.  Co.  (U.  S.), 

Rep.  403  (1880);  Waldeck  v.  Spring-  22  Sup.  Ct.  22  (1901). 


213  EXCLUDED   RISKS.  §    J333 

§  233.  Lightning. — Under  the  standard  policy  a  company  is  not 
responsible  for  damages  caused  by  lightning  when  not  assumed  by 
specific  agreement  attached  to  or  indorsed  on  the  policy,  unless  fire 
results  from  the  lightning,  and  then  the  responsibility  is  limited  to 
the  damages  occasioned  by  the  fire.  Under  a  policy  which  insured 
a  building  generally  against  loss  by  fire,  which  contained  a  separate 
clause  declaring  the  insurer  should  be  liable  for  fire  by  lightning,  the 
company  was  held  not  liable  where  it  appeared  that  the  building  was 
struck  by  lightning  and  destroyed  but  there  was  no  ignition  or  com- 
bustion.229 

§  234.  Fall  of  building. — The  object  of  this  clause  is  thus  stated 
by  Mr.  Justice  Gray:230  "The  manifest  intent  and  purpose  of  the 
clause  inserted  in  each  of  these  policies,  by  which  it  is  provided  that 
'if  the  building  shall  fall,  except  as  the  result  of  a  fire,  all  insurance 
by  this  corporation  on  it  or  its  contents  shall  immediately  cease  and 
determine,'  is  that  the  insurance,  whether  upon  the  building  or  upon 
its  contents,  should  continue  only  while  the  building  remains  stand- 
ing as  a  building,  and  shall  cease  when  the  building  has  fallen  and 
become  a  ruin.  When  substantially  all  the  floors  and  the  roof  of  e 
building  used  as  a  store-house  fall,  leaving  nothing  standing  but  the 
outer  walls  and  perhaps  a  staircase,  the  building  must  be  deemed 
to  have  fallen.  When  several  buildings  or  the  goods  therein  are 
insured  by  the  same  policy,  the  fall  of  one  building  terminates  the 
policy,  at  least  on  that  building  or  its  contents."  Before  the  com- 
pany can  be  held  liable  it  must  appear  that  the  building  fell  as  a 
result  of  fire,  not  that  the  fire  resulted  from  the  fall  of  the  building.231 

229  For  an  elaborate  discussion  of  (1880).  But  the  company  was  held 
the  subject  of  liability  for  damage  liable  where  only  about  three- 
caused  by  lightning,  see  Babcock  v.  fourths  of  the  building  fell,  and 
Montgomery,  etc.,  Ins.  Co.,  4  N.  Y.  what  was  left  was  afterwards  de- 
326  (1850).  Where  the  policy  in-  stroyed  by  fire  which  was  commu- 
demnified  against  loss  from  any  ac-  nicated  from  the  adjoining  build- 
cidental  damage  "excepting  only  ing:  Breuner  v.  Liverpool,  etc., 
damage  by  fire  or  lightning,"  it  was  Ins.  Co.,  51  Cal.  101,  21  Am.  Rep. 
held  to  cover  damage  resulting  703  (1875).  See  Ermentrout  v. 
from  a  "sudden  rise  of  water"  or  a  Girard,  etc.,  Ins.  Co.,  63  Minn.  305 
flood:  Hey  v.  Guarantors',  etc.,  Co.,  (1895).  See,  also,  Fireman's  Fund 
181  Pa.  St.  220,  59  Am.  St.  644  Ins.  Co.  v.  Sholom,  80  111.  558 
(1897).  (1875),  where  it  was  held  that  the 

230Huck  v.  Globe  Ins.  Co.,  127  _  building  had  not  fallen  when  by 

Mass.  306  (1879).  a  windstorm  it  had  been  moved 

231  Transatlantic  F.  Ins.  Co.  v.  partly  from  the  posts  upon  which 

Dorsey,  56  Md.  70,  40  Am.  Rep.  403  it  had  rested  and  so  far  rendered 


§    234  THE    STANDARD   POLICY.  214 

A  policy  covered  loss  or  damage  on  a  building  by  fire  originating  from 
any  cause,  with  the  reservation  that  "if  the  building  shall  fall  ex- 
cept as  a  result  of  fire  all  insurance  by  this  company  on  it  or  its  con- 
tents shall  immediately  cease  and  determine."  The  insured  claimed 
that  the  explosion  was  caused  by  an  antecedent  fire,  and  the  company 
that  the  explosion  was  the  destroying  agency,  followed  by  fire.  It- 
was  held  that  whether  ignition  of  the  explosive  substance  was  by  a 
negligent  or  unlawful  fire,  or  by  an  innocent  fire  not  having  in  itself 
a  destructive  tendency,  the  scientific  fact  must  be  recognized  that 
such  explosions  are  preceded  by  ignition  and  accompanied  by  intense 
heat,  and  that  it  could  not  be  said  as  a  matter  of  law  that  the  loss 
was  not  covered  by  the  policy.232  There  is  no  liability  for  loss  in  case 
the  building  is  blown  down  by  wind  before  the  fire  has  reached  the 
insured  goods,  although  the  building  is  on  fire  at  the  time.233  Where 
the  policy  describes  the  premises  as  a  "two-story  and  basement  frame, 
gravel  roof,  ironclad  building,  foundations,  and  all  permanent  fix- 
tures," and  provides  that  if  the  building  or  any  part  thereof  fall 
except  as  a  result  of  fire,  all  insurance  shall  immediately  cease, 
the  insured  can  not  recover  for  the  destruction  of  the  basement  by 
fire  after  the  building  was  blown  down  by  a  wind  storm,  on  the  the- 
ory that  the  basement  or  any  part  of  it  did  not  fall  except  as  a  result 
of  fire.234 

Under  this  provision  there  can  be  no  recovery  where  fire  breaks 
out  in  the  debris  after  the  collapse  of  the  structure.233  In  a  case 
where,  after  the  fall  of  a  part  of  the  building,  the  remainder  was 
destroyed  by  fire,  the  court  said  :236  "We  can  not  say  that  the  fall  of 
two-fifths  of  the  ice-house,  leaving  the  other  three  separate  compart- 
ments standing  intact,  was  a  fall  of  the  building  within  the  terms 

unfit  for  occupancy  that  the  most  -M  Teutonia  Ins.  Co.  v.  Beard,  74 

of  the  furniture  had  been  removed.  111.  App.  496  (1897). 

In  Huck  v.  Globe  Ins.  Co.,  127  Mass.  235  Liverpool,  etc.,  Ins.  Co.  v.  Ende, 

306    (1879),    it   was    held    that    the  65  Tex.  118   (1885);   Nave  v.  Home, 

building  had  fallen;    since  nothing  etc.,    Ins.   Co.,   37   Mo.   430,   90   Am. 

remained    standing    but    the    outer  Dec.  394  (1866);  Huck  v.  Globe  Ins. 

walls,    and    an    elevator    five    feet  Co.,  127  Mass.  306,  34  Am.  Rep.  373 

square  in  one  corner.  (1879). 

232  Renshaw  v.  Fireman's  Ins.  Co.,  23S  Security   Ins.   Co.   v.   Mette,    27 
33  Mo.  App.  394  (1889).  111.    App.    324     (1888).      See,    also, 

233  Fred  J.  Kiesel  &  Co.  v.  Sun  Ins.  Breuner  v.  Liverpool,  etc.,  Ins.  Co., 
Office,  88  Fed.  243,  31  C.  C.  A.  515  51  Cal.  101   (1875);   Leonard  v.  Ori- 
(1898).  ent  Ins.  Co.,  109  Fed.  286,  48  C.  C.  A. 

369,  54  L.  R.  A.  706  (1901). 


215  EXCLUDED   PROPERTY.  §    235 

of  the  condition;  otherwise  there  is  no  halting  point  short  of  the 
proposition  that  the  fall  of  any  substantial  part  of  the  building  puts 
the  condition  in  operation  and  terminates  the  risk." 

§  235.  City  ordinances. — The  parties  are  presumed  to  contract  in 
view  of  city  ordinances,  and  where  a  building  is  partly  destroyed,  and 
the  application  to  repair  is  refused  by  the  city  authorities,  it  will  be 
deemed  a  total  loss.237 

VI.     Excluded  Property. 

This  company  shall  not  be  liable  for  loss  to  accounts,  bills,  cur- 
rency, deeds,  evidences  of  debt,  money,  notes,  or  securities;  nor,  un- 
less liability  is  specifically  assumed  hereon,  for  loss  to  awnings,  bul- 
lion, casts,  curiosities,  drawings,  dies,  implements,  jewels,  manu- 
scripts, medals,  models,  patterns,  pictures,  scientific  apparatus,  signs, 
store  or  office  furniture  or  fixtures,  sculpture,  tools,  or  property  held 
on  storage>  or  for  repairs;  *  *  *  nor  for  any  greater  proportion 
of  the  value  of  plate  glass,  frescoes,  and  decorations  than  that  which 
this  policy  shall  bear  to  the  whole  insurance  on  the  building  de- 
scribed.23* 

§  236.  Exceptions  and  limitations. — Certain  articles  are  expressly 
excepted  from  the  contract  of  insurance,  and  the  only  questions  left 
are  those  of  construction.239  After  it  appears  that  there  has  been  a 
loss  by  fire,  the  burden  is  upon  the  insurer  to  show  that  certain  ar- 
ticles fall  within  the  exceptions.240  If  the  articles  thus  excepted  are 
included  in  the  description  of  the  property  insured,  the  written  pro- 
vision controls.  Thus,  "patterns"  are  excluded  by  this  clause,  but 
under  a  policy  insuring  "fixed  and  movable  machinery,  engines, 
lathes  and  tools,"  wooden  patterns  which  from  their  size  and  shape 

237  Hamburg,    etc.,    F.    Ins.    Co.    v.  evidences    and    securities    of    prop- 
Garlington,  66  Tex.  103  (1886).  erty  of  every  kind,  books,  wearing 

238  This  provision  is  found  in  the  apparel,  plate,  money,  jewels,  med- 
standard  policies  of  New  York,  New  als,  patterns,  models,  scientific  cab- 
Jersey,   Connecticut,   Rhode   Island,  inets     and     collections,     paintings, 
Wisconsin,   Louisiana,    Iowa,   North  sculpture  and  curiosities  are  not  in- 
Dakota,    South    Dakota,    Michigan,  eluded  in  said  insured  property  un- 
and  North  Carolina.     The  following  less  specially  mentioned." 
provision   appears   in   the   standard        23°  The  articles  enumerated   differ 
policies    of    Massachusetts,    Minne-  in  different  standard  forms. 

sota,  Maine,  and  New  Hampshire:  ""Portsmouth  Ins.  Co.  v.  Reyn- 
"Bills  of  exchange,  notes,  accounts,  olds,  32  Gratt.  (Va.)  613  (1880). 


§    236  THE    STANDARD   POLICY.  216 

admitted  of  being  managed  and  applied  by  the  hands  of  one  man 
were  covered.241  Furniture  and  movables  are  not  "fixtures,"242  but 
it  may  be  shown  that  there  is  a  well-settled  custom  by  which  the  words 
"store  fixtures"  in  a  policy  are  understood  to  include  tools,  furniture 
and  all  movable  articles  in  shops  which  are  necessary  and  used  in  the 
ordinary  course  of  trade.243  The  words  "store  fixtures"  in  a  policy 
insuring  buildings  and  additions  occupied  as  stores  and  shoe  factory 
should  be  given  their  popular  meaning  of  fixed  furniture  peculiarly 
adapted  to  a  room  or  store.  They  were  thus  held  not  to  refer  to  the 
fixtures  of  a  factory,  and  not  to  include  partitions,  doors,  windows, 
boiler  fixtures,  elevator,  machinery,  steam  heating  apparatus,  gas- 
piping  and  speaking  tubes.244  Where  the  exception  was  of  "fences 
and  other  yard  fixtures,  sidewalks  and  store  furniture  and  fixtures," 
it  was  held  that  the  shelving  in  a  house  and  office  inclosed  in  a  rail- 
ing iu  one  corner  of  the  interior  were  store  fixtures  within  the  mean- 
ing of  the  exception.245  Furniture  stored  in  a  hotel  to  be  used  in  the 
business  of  a  hotel  is  not  within  this  exception.246 

The  word  "storage"  means  safe  custody,  and  as  here  used  applies 
only  to  the  storing  of  merchandise  for  trade  purposes,  and  when 
storing  is  the  principal  object  of  the  deposit.247  Thus,  it  does  not 
apply  to  goods  kept  merely  for  sale,  raw  material  kept  on  hand  for 
the  purpose  of  being  manufactured,248  or  to  goods  temporarily  left  in 
a  storeroom.249  Silver  forks  and  tea  and  table  spoons  are  not 
"plate,"  and  are  not  excluded  by  a  clause  excluding  "plate"  and 
other  articles.250 


241  Lovewell  v.  Westchester  F.  Ins.  v.   Gwathmey,   82   Va.   923,   1   S.   E. 

Co.,  124  Mass.  418,  26  Am.  Rep.  671  209   (188T).     As  to  plate  and  paint- 

(1878).  ings,   see   Moadinger  v.   Mechanics' 

""Holmes    v.     Charlestown,     etc.,  F.    Ins.    Co.,    2    Hall    (N.    Y.)    490 

Ins.     Co.,     10     Mete.     (Mass.)     211  (1829). 

(1845).  247New    York,     etc.,     Ins.     Co.    v. 

243  Whitmarsh   v.   Conway   F.    Ins.  Langdon,     6     Wend.     (N.     Y.)     623 

C6.,  16  Gray  (Mass.)  359  (1860).  (1831). 

""Thurston  v.  Union  Ins.  Co.,  17  248Vogel  v.  People's,  etc.,  Ins.  Co., 

Fed.  127  (1883).  9  Gray  (Mass.)  23  (1857). 

245  Commercial   F.   Ins.   Co.  v.   Al-  =*"  Hynds     v.     Schenectady,     «tc., 
len,  80  Ala.  571  (1886).  Ins.  Co.,  11  N.  Y.  554  (1854). 

246  Continental   Ins.   Co.  v.   Pruitt,  25°  Hanover  F.  Ins.  Co.  v.  Mannas- 
65  Tex.  125   (1885);   Home  Ins.  Co.  son,  29  Mich.  316  (1874). 


217  EXCLUDED    PROPERTY.  8    237 

I 

§  237.  Plate  glass,  frescoes  and  decorations. — These  articles  are 
not  excepted  from  the  contract  of  insurance,  as  this  clause  merely 
provides  that  in  case  of  loss  the  amount  of  recovery  shall  not  be  any 
greater  proportion  of  their  value  than  the  policy  bears  to  the  whole 
insurance  on  the  building  described.251 

281  Moadinger  v.  Mechanics'  F.  Ins.  Co.,  2  Hall  (N.  Y.)  490  (1829). 


CHAPTEE  XI. 


PROVISIONS  OF   THE   STANDARD  POLICY,   CONTINUED. 


VII.  Provisions    Relating    to   Inter-  SEC. 
est  in  and  Care  of  Property.  272. 

SEC.  273. 

245.  Other  insurance. 

246.  Definition — Different    interests.  274. 

247.  Whether  valid  or  invalid. 

248.  Where  the  words  valid  or  in-  275. 

valid  do  not  appear.  276. 

249.  Consent     of     the     company —  277. 

Waiver.  278. 

250.  Policy    covering    part    of    the 

property.  279. 

251.  Operation  of  manufacturing  es-  280. 

tablishment.  281. 

252.  Running  over-hours. 

TT 

253.  Increase  of  risk. 

282 

254.  Changes  in  adjoining  property. 

255.  Effect  of  increase  of  hazard.  X. 

256.  Repairs — Employment    of    me-     283. 

chanics. 

257.  Ownership.  284. 

258.  Incumbrances.  285. 

259.  Illustrations. 

260.  Illustrations  of  breach  of  con- 

dition. 

261.  Building  on  leased  ground. 

262.  Incumbrance   by   chattel   mort- 

gage. 

263.  Foreclosure  proceedings.  „„„ 

264.  Generation  of  illuminating  gas. 

VIII.  Change   in  Interest,    Title  or    290. 

Possession.  291 

265.  Scope  of  provision. 

266.  Transfer  of  part  interest. 

267.  Executory  contract  of  sale. 

268.  Incumbrances. 

269.  Defeasible  conveyances.  XIII 

270.  Invalid  conveyances.  293. 

271.  Sale  with  purchase-money  mort-     294. 

gage.  295. 

(218) 


XI. 

286. 
287. 

288. 


XII. 

292. 


Conveyance  to  wife  of  insured. 

Transfers  by  and  between  part- 
ners. 

Transfers  between  joint  own- 
ers. 

Legal  process  or  judgment. 

By  judgment. 

By  partition. 

Assignment  and  bankruptcy 
proceedings. 

Transfer  by  death. 

Change  of  possession. 

Lease  of  property. 

Assignment. 
Assignment  of  policy. 

Prohibited  Articles. 
Use     of     property — Prohibited 

articles. 

Prohibited  articles,  continued. 
Exception  in  favor  of  kerosene 

oil. 

Vacancy. 

In  general. 

Construction. 

Vacant     and     unoccupied     not 

synonymous. 
Construction   when   applied   to 

dwelling  house. 
Building — Contents — Vacancy. 
Illustrations  of  construction  of 

this  provision. 

Authorized  Change  of  Location. 
In  general. 

.  Renewal  of  Contract. 
In  general. 
Illustrations. 
Reformation  of  policy. 


219  INTEREST — CAKE  OF  PROPERTY.  §  245 

XIV.  Cancellation  of  Policy.  SEC. 

SEC.  300.  What   amounts   to    a    cancella- 

296.  In  general.  tion. 

297.  The  time.  XV.  Waiver. 

298.  Authority  of  agent  to  cancel.  301  Limitations  upon  the  power  to 

299.  Return  of  premium.  waive. 

VII.     Provisions  Relating  to  Interest  in  and  Care  of  Property. 

This  entire  policy,,  unless  otherwise  provided  by  agreement  indorsed 
hereon  or  added  hereto,  shall  be  void  if  the  insured  now  has  or  shall 
hereafter  make  or  procure  any  other  contract  of  insurance,  whether 
valid  or  not,  on  property  covered  in  whole  or  in-  part  by  this  policy; 
or  if  the  subject  of  insurance  be  a  manufacturing  establishment,  and  it 
be  operated  in  whole  or  in  part  at  night  later  than  ten  o'clock,  or  if 
it  cease  to  be  operated  for  more  than  ten  consecutive  days;  or  if  the 
hazard  be  increased  by  any  means  within  the  control  or  knowledge  of 
the  insured;  or  if  mechanics  be  employed  in  building,  altering  or  re- 
pairing the  within  described  premises  for  more  than  fifteen  days 
at  any  one  timte;  or  if  the  interest  of  the  insured  be  other  than  un- 
conditional and  sole  ownership;  or  if  the  subject  of  insurance  be 
a  building  on  ground  not  owned  by  the  insured  in  fee-simple;  or  if 
the  subject  of  insurance  be  personal  property  and  be  or  become  in- 
cumbered  by  a  chattel  mortgage;  or  if,  with  the  knowledge  of  the 
insured,  foreclosure  proceedings  be  commenced  or  notice  given  of 
sale  of  any  property  covered  by  this  policy  by  virtue  of  any  mortgage 
or  trust  deed;  *  *  *  or  if  illuminating  gas  or  vapor  be  generated 
in  the  described  building  (or  adjacent  thereto)  for  use  therein. 

§245.  Other  insurance. — The  entire  policy  shall  be  void  if  the 
insured  at  the  time  of  the  execution  of  the  policy  has,  or  shall  there- 
after make  or  procure,  any  other  contract  of  insurance,  whether  valid 
or  not,  on  the  property  covered  in  whole  or  in  part  by  the  policy.1 

1  This  clause  is  found  ;in  the  shall  hereafter  make  any  other  in- 
standard  policies  of  New  York,  New  surance  on  the  said  property  with- 
Jersey,  Connecticut,  Rhode  Island,  out  the  assent  of  the  company."  The 
Wisconsin,  Louisiana,  Iowa,  North  New  Hampshire  policy  provides 
Dakota,  South  Dakota,  Michigan,  that:  "The  policy  shall  be  void  if 
and  North  Carolina.  The  following  the  insured  at  the  time  of  any  loss 
provision  is  found  in  the  standard  has  any  other  insurance  on  said 
policies  of  Massachusetts,  Minne-  property,  without  the  assent  in  writ- 
sota  and  Maine:  "The  policy  shall  ing  or  in  print  of  the  company." 
be  void  if  the  assured  now  has  or 


§    245  THE    STANDARD    POLICY.  220 

A  provision  rendering  the  policy  void  if  the  insured  has,  or  shall 
make  or  procure  other  insurance,  is  reasonable  and  valid,2  and  has  for 
its  object  the  prevention  of  an  increase  of  the  moral  hazard  without 
knowledge  of  the  company.3  "Those  insurance  policies  which  pro- 
vide for  the  nullity  of  the  contract  in  the  event  of  other  insurance 
being  effected  upon  the  same  property,  without  the  assent  of  the 
company,  have  never  been  held  to  be  absolutely  null  when  the  contract 
was  all  regular  upon  its  face  but  merely  voidable  at  the  option  of  the 
insurer.  The  object  of  such  clauses  in  an  insurance  policy  is  to  pre- 
vent other  insurance  and  the  consequent  temptation  to  burn  or  lessen 
protection  against  fire."4  The  provision  in  the  policy  is  effective,  al- 
though not  referred  to  by  the  parties  before  the  policy  is  issued. 
A  party  accepting  a  policy  is  bound  by  its  terms,  conditions  and  limi- 
tations, and  in  the  absence  of  fraud  or  mistake  is  conclusively  pre- 
sumed to  know  its  contents.  In  a  recent  case,  which  arose  under  the 
standard  form  of  policy,  the  court  said:5  "The  clause  of  the  policy 
quoted  declares,  in  effect,  that  the  entire  policy  shall  be  void  in  case 
the  assured  had  or  should  procure  any  other  insurance  on  the  prop- 
erty covered  by  the  policy,  or  incumbered  the  same  by  a  chattel  mort- 
gage, 'unless  otherwise  provided  by  agreement  indorsed  thereon  or 

• 

2  Commercial  Union  Assur.  Co.  v.  Young,   86  Ala.  424,  11   Am.   St.   51 

Norwood,  57  Kan.  610,  47  Pac.  529  (1888).     Concealment  of  the  exist- 

(1897)  [citing  Allen  v.  German,  etc.,  ence  of  other  insurance  in  no  way 

Ins.  Co.,  123  N.  Y.  6,  25  N.  E.  309  tends  to  show  fraud:     German,  etc., 

(1890);    Union   Nat'l   Bank  v.   Ger-  Ins.  Co.  v.  Paul    (Ind.  Ter.),  53  S. 

man  Ins.  Co.,  18  C.  C.  A.  203,  71  Fed.  W.  442  (1899). 

473     (1896);     Funke    v.    Minnesota,         4  Saville  v.  ^Etna  Ins.  Co.,  8  Mont, 

etc.,  Ins.  Ass'n,  29  Minn.  347,  13  N.  419,  20  Pac.  646   (1889). 
W.  164   (1882);   Bard  v.  Penn,  etc.,        5  Wilcox  v.   Continental   Ins.   Co., 

Ins.    Co.,    153    Pa.    St.    257,    25    Atl.  85  Wis.  193,  55^  N.  W.  188    (1893); 

1124    (1893)];    Barnard  v.  National  O'Brien  v.  Home   Ins.  Co.,  79   Wis. 

F.  Ins.  Co.,  27  Mo.  App.  26   (1887);  399,  48  N.  W.  714  (1891);  Bosworth 

Northern  Assur.  Co.  v.  Grand  View  v.   Merchants'   F.   Ins.  Co.,   80  Wis. 

Bldg.  Ass'n  (U.  S.),  22  Sup.  Ct.  133  393,   49   N.  W.   750    (1891).     Where 

(1902).    In  Georgia  Home  Ins.  Co.  v.  a  policy  is  issued  upon  property  on 

Rosenfleld,  95  Fed.  358  (1899),  it  was  which  there  is  already  $3,000  insur- 

held  that  the  fact  that  a  short  term  ance  and  contains  the  words  "total 

policy    taken    in    violation    of    this  concurrent    insurance    $4,000,"    the 

provision    expires    before    the    loss,  insured  may  take  $1,000  additional 

will  not  reinstate  the  policy.  insurance    without   the    consent   of 

"O'Leary  v.  Merchants',  etc.,  Ins.  the  company:   East  Texas  F.  Ins.  Co. 

Co.,  100  Iowa  173,  66  N.  W.  175,  69  N.  v.  Blum,  76  Tex.  653,  13  S.  W.  572 

W.    420    (1895);    Queen   Ins.    Co.   v.  (1890). 


221  INTEREST — CARE  OF  PROPERTY*.  §  246 

added  thereto.'  There  is  no  pretense  of  any  agreement  indorsed 
thereon,  or  otherwise,  and  such  prior  insurance  and  chattel  mort- 
gage are  admitted  in  the  complaint.  Such  being  the  facts,  it  fol- 
lows from  the  authorities  cited  that  the  policy  was  void  in  its  in- 
ception unless  the  condition  was  waived  by  the  company." 

A  provision  requiring  the  insured  to  give  notice  of  "any  other 
insurance  effected"  refers  to  prior  as  well  as  subsequent  insurance.6 

§  246.  Definition  —  Different  interests.  —  The  words  "other," 
"double"  and  "overinsurance"  are  used  indiscriminately  to  describe 
the  obtaining  of  two  or  more  policies  upon  the  same  interest,  against 
the  same  risk  and  for  the  benefit  of  the  same  person.7  Although  it 
must  be  upon  the  same  interest  it  need  not  be  in  the  same  name.8 
The  provision  is  not  violated  by  the  existence  of  a  prior  policy  in 
which  the  insured  has  no  interest  and  from  which  he  can  receive  no 
benefit.9  An  insurance  by  a  partner  of  his  undivided  interest  is 
not  a  breach  of  the  condition.10  It  follows  that  different  interests  may 
be  insured  j11  such  as  that  of  the  owner  of  the  land  and  a  person  hold- 
ing under  a  contract  for  a  deed,12  or  a  mortgagor  and  mortgagee.13 
But  where  the  policy  is  in  the  name  of  the  mortgagor,  and  is  made  pay- 
able to  the  mortgagee  as  his  interest  may  appear,  a  subsequent  policy 
obtained  by  the  mortgagor  is  within  the  provision.14  A  mortgagee  to 

8  Warwick  v.   Monmouth,   etc.,    F.  "  Nussbaum  v.  Northern  Ins.  Co., 

Ins.  Co.,  44  N.  J.  L.  83,  43  Am.  Rep.  37    Fed.    524     (1889);     Mitchell    v. 

343  (1882).  Home  Ins.  Co.,  32  Iowa  421  (1871); 

7  California  Ins.  Co.  v.  Union,  etc.,  Herkimer    v.    Rice,    27    N.    Y.    173 
Co.,  133  U.  S.  387   (1890);   Lebanon,  (1863);     Home     Ins.     Co.    v.    Bait, 
etc.,  Ins.  Co.  v.  Kepler,  106  Pa.  St.  Warehouse  Co.,  93  U.  S.  527  (1876); 
28   (1884);  JEtna  F.  Ins.  Co.  v.  Ty-  City,  etc.,  Bank  v.  Pennsylvania  F. 
ler,  16  Wend.    (N.  Y.)   385,  30  Am.  Ins.  Co.,  122  Mass.  165  (1876). 

Dec.  90    (1836);   Clarke  v.  Western  12^Etna   F.   Ins.   Co.  v.   Tyler,   16 

Assur.  Co.,  146  Pa.  St.  561,  28  Am.  Wend.    (N.  Y.)   385    (1836). 

St.  821  (1891).  "Wheeler   v.   Watertown   F.    Ins. 

8  Perkins    v.    New    England,    etc.,  Co.,  131   Mass.   1    (1881);    Guest  v. 
Ins.  Co.,  12  Mass.  214  (1815);  Godin  New    Hampshire    F.    Ins.    Co.,    66 
v.   London  Assur.  Co.,   1   Burr.   489  Mich.  98,  33  N.  W.  31  (1887);  Wood- 
(1758);  DeWitt  v.  Agricultural  Ins.  bury  v.  Charter  Oak,  etc.,  Ins.  Co., 
Co.,    157    N.   Y.    353,    51    N.    E.    977  31  Conn.  517   (1863). 

(1898).  "Gillett   v.    Liverpool,    etc.,    Ins. 

9Copeland  v.  Phoenix  Ins.  Co.,  96  Co.,    73    Wis.    203,    9    Am.    St.    784 

Ala.  615,  38  Am.  St.  134  (1892).  (1888);  Sias  v.  Roger  Williams  Ins. 

10  Hall  v.   Concordia   F.    Ins.   Co.,  Co.,  8  Fed.  187  (1880). 
90  Mich.  403,  51  N.  W.  524    (1892). 


§    247  THE    STANDARD    POLICY.  222 

whom  loss  in  a  policy  is  made  payable,  and  who  accepts  and  retains  a 
policy  which  shows  on  its  face  that  the  mortgagor  is  insured,  can 
not  say  that  he  is  not  affected  by  the  imputed  knowledge  of  the 
mortgagor  as  to  the  issuance  of  the  policy,  for  the  purpose  of  avoiding 
the  effect  of  other  insurance  procured  by  the  latter.15  But  invalid  in- 
surance taken  by  the  owner  of  the  property  in  violation  of  this  pro- 
vision can  not  be  considered  in  determining  the  right  of  the  mort- 
gagee when  the  policy  provides  that  his  interest  shall  not  be  invali- 
dated by  any  act  of  the  owner.16  Contemporaneous  insurance  is 
within  this  provision.17  So,  a  provision  is  broken  by  a  prior  policy 
existing  in  the  name  of  the  joint  owner  of  the  property.18 

The  insured  is  not  affected  by  a  subsequent  policy  procured  by  a 
stranger  without  his  knowledge  and  consent,19  although  he  may  be- 
come bound  by  ratifying  such  acts  or  accepting  benefits  under  the 
insurance.  Thus,  previous  insurance  taken  out  by  an  unauthorized 
agent,  and  of  which  the  insured  had  no  knowledge  until  after  the 
loss,  does  not  avoid  the  policy.20  But  where,  without  the  knowledge 
of  the  insured,  his  wife  procured  additional  insurance  upon  the 
property  covered  by  the  policy,  and  after  the  loss  he  received  the 
benefits  of  the  additional  insurance,  it  was  held  that  by  thus  accept- 
ing the  benefits  of  the  unauthorized  act  he  ratified  the  same.21 

§  247.  Whether  valid  or  invalid. — These  words  were  added  for  the 
purpose  of  avoiding  controversy  as  to  the  effect  of  subsequent  in- 
surance under  a  policy  which  contains  a  provision  which  renders  it 
void  or  voidable  by  the  existence  of  a  prior  policy.  It  has  been  gen- 
erally sustained,  although  some  courts  have  attempted  to  construe  it 

15  Holbrook  v.  Baloise  F.  Ins.  Co.,  joint    ownership    was    other    insur- 

117  Gal.  561,  49  Pac.  555  (1897).  ance. 

10  Eddy    v.    London    Assur.    Corp.,  1!)  Carpenter     v.     Providence     Ins. 

143  N.  Y.  311,  25  L.  R.  A.  686  (1894).  Co.,  16  Pet.  (U.  S.)  495  (1842).    See 

"United    Firemen's    Ins.    Co.    v.  Phoenix   Ins.   Co.  v.   Michigan,  etc., 

Thomas,   92   Fed.   127,   34   C.   C.   A.  R.  Co.,  28  Ohio  St.  69  (1875). 

240  (1899).  ^Cowart  v.  Capital  City  Ins.  Co., 

"Horridge     v.     Dwelling     House  114  Ala.  356,  22  So.  574  (1896);  Mc- 

Ins.  Co.,  75  Iowa  374,  39  N.  W.  648  Kelvy  v.  German,  etc.,  Ins.  Co.,  161 

(1888).     In    Pitney    v.    Glens    Falls  Pa.    St.    279,    28    Atl.    1115    (1893); 

Ins.  Co.,  65  N.  Y.  6    (1875),  it  was  Hughes   v.    Insurance   Co.,    40    Neb. 

held    that    where    property    owned  626,  59  N.  W.  112  (1894). 

in   common   was   insured,   a   subse-  21  German  Ins.  Co.  v.  Emporia,  etc., 

quent  policy  effected  by  one  of  the  Ass'n,  9  Kan.  App.  803,  59  Pac.  1092 

owners     without     mentioning     the  (1900). 


223  INTEREST CARE  OF  PROPERTY.  §  248 

• 

away.22  Thus,  in  New  Hampshire,  it  was  held  that  as  a  subsequent 
void  policy  is  a  mere  nullity  it  can  have  no  effect  upon  existing 
rights.23  So,  in  Indiana,  it  was  held  that  there  was  a  breach  only 
when  it  was  necessary  to  offer  extrinsic  evidence  to  show  that  the 
subsequent  policy  was  invalid.24  Where  the  same  conditions  are  con- 
tained in  a  policy,  it  is  held  in  Michigan25  that  the  subsequent  policy 
is  void,  and  in  North  Carolina26  that  it  affects  the  prior  policy.  In 
Massachusetts  it  was  recently  held  that  in  an  action  on  a  policy  con- 
taining a  condition  against  other  insurance,  the  fact  that  the  other 
policies  were  issued  by  other  companies  either  before  or  after  the 
one  in  suit,  without  the  consent  of  the  company,  or  that  suit  is 
pending  thereon,  is  no  defense  where  such  policies  contain  the  same 
provisions.  Each  policy  contained  a  rider,  similar  to  that  on  the 
policy  on  which  the  action  was  brought,  which  contained  the  words: 
"This  entire  policy,  unless  otherwise  provided  by  agreement  indorsed 
hereon  or  added  hereto,  shall  be  void  if  the  insured  now  has,  or  shall 
hereafter  make  or  procure,  any  other  contract  of  insurance,  whether 
valid  or  not,  on  the  property,  in  whole  or  in  part,  covered  by  this 
policy."27  "It  is  clear,"  said  the  court,  "that  under  our  decisions 
neither  of  these  policies  affords  any  defense  to  the  action.  If  the 
policy  of  the'  Citizens'  Company  was  issued  before  the  policy  in  suit  it 
became  void  by  its  terms  when  the  defendant  issued  its  policy.  If 
it  was  issued  subsequently,  as  was  the  policy  of  the  Security  Company, 
for  the  same  reason  neither  it  nor  the  policy  of  the  latter  company  took 
effect."  Where  the  prior  policy  had  become  void  by  breach  of  con- 
dition before  the  issuance  of  the  policy  in  question,  which  contained 
the  "valid  or  invalid"  clause,  it  was  held  that  there  was  no  breach  of 
condition.28 

§  248.  Where  the  words  "valid  or  invalid"  do  not  appear. — There 
has  been  much  controversy  over  the  effect  of  subsequent  insurance 
which,  by  its  terms,  is  rendered  void  or  voidable  by  the  existence  of 

22  Phoenix  Ins.  Co.  v.  Copeland,  90        25  Keyser  v.  Hartford  F.  Ins.  Co., 
Ala.  386  (1890);  Sugg  v.  Hartford  F.  66  Mich.  664,  33  N.  W.  756  (1887). 
Ins.  Co.,  98  N.  C.  143,  3  S.  E.  732         2"  Sugg  v.  Hartford  F.  Ins.  Co.,  98 
(1887);  Bigler  v.  New  York  Ins.  Co.,  N.  C.  143,  3  S.  B.  732  (1887). 

22  N.  Y.  402  (1860).  *  Hayes  v.  Milford,  etc.,  Ins.  Co., 

23  Gee  v.  Cheshire,  etc.,  Ins.  Co.,  55     170  Mass.  492,  49  N.  E.  754   (1898), 
N.  H.  65,  20  Am.  Rep.  171  (1874).          citing  earlier  cases. 

24Phenix  Ins.  Co.  v.  Lamar,  106  28  Stevens  v.  Citizens'  Ins.  Co.,  69 
Ind.  513,  55  Am.  Rep.  764  (1886).  Iowa  658  (1886). 


§  248 


THE    STANDARD    POLICY. 


224 


prior  insurance.  The  importance  of  cases  discussing  this  question 
has  been  considerably  decreased  by  the  adoption  of  the  standard 
form.  In  a  recent  case  in  Maryland  it  was  said:29  "Does  the  fact 
that  a  subsequent  policy  was  procured  without  the  consent  of  the 
first  underwriter  avoid  the  first  policy  under  the  above  quoted  con- 
ditions contained  therein  against  other  insurance,  when  the  second 
policy  explicitly  declares  that  the  company  which  issued  it  shall 
not  be  liable  for  loss  if  there  is  other  prior  insurance,  whether  valid 
or  not,  held  on  the  same  property  without  the  written  consent  of 
the  second  insure^  ?  The  doctrine  laid  down  by  the  highest  tribunals 
of  Massachusetts,  Pennsylvania  and  other  states  is  that  the  subse- 
quent insurance,  being  invalid  at  the  time  of  the  loss  by  reason  of  the 
breach  of  the  condition  therein,  the  prior  insurance  is  good,  and  the 
first  underwriter  is  liable  on  the  policy  issued  by  it.30  On  the  other 
hand,  it  has  been  held  elsewhere  that  the  subsequent  policy,  whether 
legally  enforceable  or  not,  or  whether  voidable  on  its  face  or  voida- 
ble for  extrinsic  matter,  works  a  forfeiture  of  the  prior  policy.31 


29  Sweeting  v.  Mutual  Jf;  Ins.  Co., 
83  Md.  63,  32  L.  R.  A.  570   (1896). 

30  Thomas   v.   Builders',   etc.,    Ins. 
Co.,  119  Mass.  121,  20  Am.  Rep.  317 
(1875);  Allison  v.  Phoenix  Ins.  Co., 
3  Dill.  (U.  S.)  480  (1873);  Fireman's 
Ins.   Co.   v.    Holt,    35    Ohio    St.    189 
(1878);  Knight  v.  Eureka,  etc.,  Ins. 
Co.,   26   Ohio   St.   664,   20  Am.   Rep. 
778    (1875);    Stacey  v.   Franklin  F. 
Ins.    Co.,    2   Watts   &    S.    (Pa.)    506 
(1841);    Jackson    v.    Massachusetts 
Mut.  F.  Ins.  Co.,   23  Pick.    (Mass.) 
418,  34  Am.  Dec.  69    (1839);    Clark 
v.  New  England  Mut.  F.  Ins.  Co.,  6 
Gush.    (Mass.)   342,  53  Am.  Dec.  44 
(1850);    Hardy  v.  Union,  etc.,   Ins. 
Co.,    4    Allen    (Mass.)    217    (1862); 
Philbrook  v.  New  England,  etc.,  Ins. 
Co.,  37  Me.  137    (1853);   Lindley  v. 
Union  Farmers',  etc.,  Ins.  Co.,  65  Me. 
368,  20  Am.  Rep.  701  (1876);  Gale  v. 
Belknap  County  Ins.  Co.,  41  N.  H. 
170    (1860);    Gee   v.   Cheshire,   etc., 
Ins.  Co.,  55  N.  H.  65  (1874);  Jersey 
City  Ins.  Co.  v.  Nichol,  35  N.  J.  Eq. 
291,     40     Am.     Rep.     625      (1882); 


Schenck  v.  Mercer,  etc.,  Ins.  Co.,  24 
N.  J.  L.  447  (1854);  Rising  Sun  Ins. 
Co.  v.  Slaughter,  20  Ind.  520  (1863). 
In  St.  Paul,  etc.,  Ins.  Co.  v.  Knicker- 
bocker, etc.,  Co.,  93  Fed.  931,  36  C. 
C.  A.  19  (1899),  it  was  held  that  a 
provision  making  the  policy  void 
upon  taking  other  insurance,  so  that 
the  entire  amount  on  the  policy  shall 
exceed  a  certain  sum,  is  not  violated 
by  additional  insurance  to  be  valid 
only  in  case  of  deficiency  of  the 
prior  policies  below  the  amount  so 
named,  although  the  combined  face 
value  of  the  policies  exceeds  the 
amount  so  limited. 

31  Carpenter  v.  Providence,  etc., 
Ins.  Co.,  16  Pet.  (U.  S.)  495,  10  L. 
ed.  1044  (1842);  Allen  v.  Merchants', 
etc.,  Ins.  Co.,  30  La.  Ann.  1386,  31 
Am.  Rep.  243  (1878);  Somerfield  v. 
State  Ins.  Co.,  8  Lea  (Tenn.)  547 
(1881);  Funke  v.  Minnesota,  etc., 
Ins.  Ass'n,  29  Minn.  347,  43  Am.  Rep. 
216  (1882);  Lackey  v.  Georgia  Home 
Ins.  Co.,  42  Ga.  456  (1871);  Bigler 
v.  New  York,  etc.,  Ins.  Co.,  22  N.  Y. 


225  INTEREST — CARE  OF  PROPERTY.  §  248 

There  is  still  an  intermediate  view  taken  by  the  Supreme  Court  of 
Iowa32  to  the  effect  that  the  question  of  the  validity  of  the  prior  in- 
surance turns  upon  whether  the  subsequent  policy  has  in  fact  been 
avoided.  If  the  second  policy  is  recognized  by  the  insurer  issuing  it 
to  be  a  valid  policy,  any  breach  of  conditions  being  waived,  this  makes 
it  valid  insurance  and  avoids  the  first  policy;  but  if  the  subsequent 
policy  has  been  rescinded  for  condition  broken,  there  is  no  other  insur- 
ance so  as  to  invalidate  the  prior  policy.  The  obvious  and  insuperable 
objection  to  this  latter  view  lies  in  the  fact  that  it  makes  the  validity  of 
the  contract  between  the  parties  under  the  first  policy  depend  not  upon 
their  own  agreement  nor  the  effect  of  that  agreement,  nor  upon  their 
own  acts,  or  acts  of  either  of  them,  but  upon  what  another  person, 
the  second  underwriter,  a  stranger  to  the  first  contract,  may  volunta- 
rily do  with  respect  to  affirming  or  repudiating  a  totally  different 
and  distinct  contract  of  insurance,  without  the  slightest  reference 
to  any  judicial  inquiry  as  to  the  validity  or  invalidity  of  the  second 
policy  or  its  resultant  legal  effect  upon  the  first."  The  court  fur- 
ther said:  "Giving  to  the  words  of  the  contract  of  insurance  set 
forth  in  the  first  policy  their  obvious  meaning,  and  bearing  in  mind 
that  they  do  not,  as  do  those  used  in  the  second  policy,  relate  to  or 
specifically  designate  invalid  insurance,  the  only  tenable  conclusion 
is,  that  the  intention  of  both  the  contracting  parties  was  to  strike 
down  the  first  policy  only  on  condition  that  the  second  was  valid  and 
binding.  And  this  is  the  conclusion  reached  by  the  best  considered 
cases.  If  the  'other  insurance'  does  not  mean  such  a  contract  as  is 
legally  binding  and  enforceable,  then  no  certain  tests  can  be  applied, 
and  we  abandon  all  legal  guides.  As  stated  in  Missouri,  'the  sound 
conclusion  would  seem  to  be  that  in  a  case  like  this  the  other  in- 
surance must  be  legal  insurance,  and  that  the  true  issue  is  whether 
the  policy,  not  on  its  face,  but  on  all  the  facts  legally  in  evidence, 
is  binding  upon  the  insurer/  >:  So,  in  a  recent  case  in  Illinois,33  it 
was  held  that  there  can  be  no  existing  insurance  upon  property 
within  the  meaning  of  this  clause  unless  such  insurance  is  valid  and 
in  full  force  and  capable  of  being  legally  enforced  in  case  of  loss. 
Hence,  if  one  takes  a  policy  of  insurance  containing  a  provision  that 

402    (I860);    Stevenson    v.    Phoenix     33  Iowa  325  (1871);  Behrens  v.  Ger- 

Ins.  Co.,  83  Ky.  7  (1884).  mania  F.  Ins.  Co.,  64  Iowa  19  (1884). 

32  Hubbard  v.  Hartford  F.  Ins.  Co.,        33  Germania  F.  Ins.  Co.  v.  Klewer, 

129  111.  599  (1899). 

15 — ELLIOTT  INS. 


THE   STANDARD   POLICY.  226 

it  shall  be  void  in  case  of  other  insurance  on  the  same  property 
without  the  consent  of  the  company  indorsed  on  the  policy,  and  at 
the  same  time  the  insured  has  another  policy  on  the  property  not 
consented  to  by  indorsement  on  the  latter  policy,  this  will  render 
the  last  policy  inoperative  so  long  as  the  prior  policy  is  in  force, 
but  the  latter  will  attach  and  become  operative  on  the  expiration  of 
the  prior  policy. 

§  249.  Consent  of  the  company — Waiver. — By  the  terms  of  this 
policy  the  consent  of  the  company  to  other  insurance  must  be  ob- 
tained and  indorsed  upon  the  policy,  hence  a  mere  oral  permission 
to  the  insured  by  the  local  agent  who  issued  the  policy  to  take  out 
additional  insurance  is  not  binding  upon  the  company  and  does  not 
prevent  a  forfeiture  where  the  policy  contains  a  provision  that  no 
agent  shall  have  power  to  waive  any  provisions  or  conditions  except 
by  writing  attached  to  the  policy.3*  This  provision  is  effective 
against  the  act  of  the  secretary  and  general  agent  of  the  company 
where  there  is  no  proof  that  he  had  authority  to  act  for  the  com- 
pany.35 But  it  is  always  a  mere  question  of  authority.36  In  one 
case,  where  additional  insurance  was  obtained  with  the  knowledge  and 
consent  of  the  agent  who  issued  the  policy,  it  was  left  to  the  jury 
to  determine  whether  the  consent  of  the  company  had  been  given.37 
Evidence  that  notice  of  additional  insurance  was  mailed  to  the  com- 
pany, where  its  receipt  is  denied,  is  not  sufficient  to  show  compliance 
with  a  provision  requiring  that  notice  of  all  additional  insurance  shall 
be  given  to  the  company.38  A  provision  forbidding  additional  insur- 
ance is  for  the  benefit  of  the  company  and  may  be  waived  by  it.39 

34  Northern    Assur.    Co.    v.    Grand  ^  O'Leary  v.  Merchants',  etc.,  Ins. 

View  Bldg.  Ass'n  (U.  S.),  22  Sup.  Ct.  Co.,   100   Iowa  173,   62  Am.   St.  555 

133    (1902),    reversing   41    C.    C.    A.  (1896). 

207;  Lippman  v.  ^Etna  Ins.  Co.,  108  » See    Hartford     F.     Ins.    Co.    v. 
Ga.  391,  33  S.  E.  897  (1899);  Hutch-  Small,  66  Fed.  490   (1895);   Cleaver 
inson  v.  Western  Ins.  Co.,  21  Mo.  97,  v.  Traders'  Ins.  Co.,  71  Mich.  414,  15 
64  Am.  Dec.  218   (1855);   Carpenter  Am.  St.  275  (1888). 
v.  Providence,  etc.,  Ins.  Co.,  16  Pet.  37  Grubbs  v.  Virginia,  etc.,  Ins.  Co., 
(U.  S.)  495  (1842).     Where  the  pol-  110  N.  C.  108,  14  S.  E.  516  (1892). 
icy  does  not  require  the  notice  to  **  Fairfield  Packing  Co.  v.  South- 
be  in  writing,  although  it  requires  ern  Mut.  Ins.  Co.,  193  Pa.  St.  184, 
the  consent  of  the  company  to  be  44  Atl.  317  (1899). 
in  writing,   the   notice   may   be   by  *»  Bigelow  v.  Granite,  etc.,  Ins.  Co., 
parol:    Kenton   Ins.  Co.  v.   Shea,   6  94  Me.  39,  46  Atl.  808  (1900);  Kahn 
Bush    (Ky.)    174,   99   Am.    Dec.    676  v.  Traders'  Ins.  Co.,  4  Wyo.  419,  62 
(1869).  Am.  St.  47  (1893). 


227  INTEREST — CARE  OF  PROPERTY.  §,  250 

The  company  is  charged  with  knowledge  of  facts  known  to  its  agent  at 
the  time  the  policy  is  issued,  and  if  the  agent  then  knew  of  existing 
insurance  the  company  is  estopped  thereafter  to  claim  a  forfeiture  for 
breach  of  condition  against  other  insurance.40 

It  has  been  held  that  the  company  is  under  an  obligation  to  take 
some  affirmative  action  after  it  learns  of  the  violation  of  this  con- 
dition against  additional  insurance,  and  that  if  it  fails  to  do  so  within 
a  reasonable  time  after  notice  it  waives  the  stipulation.41  But  in 
a  case  where  the  policy  also  contained  a  clause  authorizing  the  com- 
pany to  terminate  at  any  time  at  its  option  by  giving  notice  and  re- 
funding a  ratable  proportion  of  the  premium,  and  there  was  evidence 
tending  to  show  that  notice  of  additional  insurance  was  communicated 
to  the  company's  agent  at  the  time  of  or  before  the  fire,  the  court 
said  :42  "The  provision  in  the  policy  authorizing  the  company  to  ter- 
minate the  contract  at  any  time,  at  its  option,  bore  no  special  relation 
to  that  concerning  other  insurance.  By  the  plain  terms  of  the  policy, 
other  insurance  without  the  consent  of  this  company  would  ipso  facto 
avoid  the  contract ;  and  in  case  of  a  contract  thus  avoided,  it  would  not 
be  obligatory  on  the  insurer  to  repay  any  of  the  unearned  premium; 
nor  would  he  be  required  to  give  notice  that  he  would  insist  upon  and 
avail  himself  of  the  proper  legal  effect  of  the  agreement.  It  re- 
quired no  affirmative  act  of  election  on  the  part  of  the  company 
to  make  operative  the  clause  avoiding  the  contract  whenever  the 
specified  conditions  should  occur.  *  *  *  The  fault  in  the  charge 
is  in  the  proposition  that  the  failure  to  cancel  the  policy  by  the  affirm- 
ative action  on  the  part  of  the  company  after  it  had  notice  of  addi- 
tional insurance,  would  of  itself  be  effectual  as  an  election  to  continue 
the  policy  in  force." 

§  250.  Policy  covering  a  part  of  the  property. — By  the  weight  0$ 
authority,  where  the  contract  is  entire,  subsequent  insurance  upon  a 

40  Northern    Assur.    Co.    v.    Grand  Pac.  822  (1897) ;  Quigley  v.  St.  Paul, 

View  Bldg.  Ass'n,  101  Fed.  77,  41  C.  etc.,  Trust  Co.,  60  Minn.  275,  62  N. 

C.  A.  207   (1900)   [but  this  case  was  W.  287  (1895). 

reversed  in  22  Sup.  Ct.  133  (1902)];  "Alabama,     etc.,     Assur.     Co.     v. 

Hackett  v.  Philadelphia  Underwrit-  Long,  etc.,  Co.,  123  Ala.  667,  26  So. 

ers,  79  Mo.  App.  16  (1899);  Swain  v.  655   (1899). 

Macon  F.  Ins.  Co.,  102  Ga.  96,  29  S.  42  Johnson  v.  American  Ins.  Co.,  41 

E.    147    (1896);    McBryde   v.    South  Minn.  396,  43  N.  W.  59   (1889).    See 

Carolina,  etc.,  Ins.  Co.,  55  S.  C.  589,  also,    Robinson    v.    Fire    Ass'n,    63 

74  Am.   St.   769    (1899);    Strauss  v.  Mich.  90,  29  N.  W.  521   (1886). 
Phenix  Ins.  Co.,  9  Colo.  App.  386,  48 


§    250  THE    STANDARD   POLICY.  228 

part  of  the  property  will  defeat  the  entire  policy.  Thus,  where  a 
part  of  the  insurance  was  apportioned  to  the  building  and  a  part 
to  household  goods  and  furniture  therein,  the  taking  of  subsequent 
insurance  upon  the  building  alone  was  held  to  avoid  the  entire  pol- 
icy. "In  order,  therefore,  to  give  effect  to  the  condition,  according  to 
the  intent  and  purpose  of  the  contract/'  said  the  court,  "it  follows 
necessarily  that  where  the  property  covered  by  one  policy,  although 
consisting  of  separate  items,  appears  to  be  so  situate  as  to  constitute 
substantially  one  risk,  then,  even  though  separate  amounts  of  the 
insurance  be  apportioned  to  each  separate  item  or  class  of  property, 
if  the  consideration  for  the  contract  and  the  risk  are  both  indivisible, 
the  contract  must  be  treated  as  entire,  nevertheless.  To  such  a  policy, 
the  principles  governing  entire  and  indivisible  contracts  are  appli- 
cable, for  the  reason  that  the  matter  which  renders  the  policy  void  as 
to  a  part  affects  the  risk  of  the  insurer  in  respect  to  other  items  in  the 
same  manner  as  it  affects  those  items  in  respect  to  which  the  contract 
is  avoided.  In  such  cases  the  only  effect  of  the  apportioning  of  the 
amount  of  the  insurance  upon  separate  items  is  to. limit  the  extent  of 
the  company's  liability  to  some  specified  sum  upon  each  item  or  class 
of  property  insured."43 

But  in  Pennsylvania  it  was  held  that  where  one  policy  covers  a 
building  and  a  subsequent  policy  in  another  company  covers  the 
building,  machinery,  shafting,  etc.,  it  is  not  a  case  of  double  insur- 
ance and  not  within  the  meaning  of  the  clause.44  So,  where  the  first 
policy  covered  "electric  lamps,  shades,  wires  and  all  other  electric 
fixtures  and  appurtenances,"  and  a  subsequent  policy  covered  house- 
hold goods  and  "fixtures  of  every  description,"  there  was  no  appor- 
tionment of  the  risk  between  the  different  kinds  of  property  insured, 
and  it  was  held  that  there  was  not  a  case  of  double  insurance.45 
In  Iowa,  under  a  policy  which  contained  the  words,  "other  concur- 
rent insurance  permitted,"  in  the  absence  of  any  limitations  in 
amount,  it  was  held  that  the  latter  policy  need  not  exactly  concur 
in  covering  all  of  the  period  of  the  time  of  insurance.46 

48  Havens   v.    Home    Ins.    Co.,    Ill  Co.  v.  Michigan,  etc.,  R.  Co.,  28  Ohio 

Ind.  90,  12  N.  E.  137    (1887).     See  St.  69  (1875). 

Pitney  v.   Glens  Falls  Ins.   Co.,   65  "  Sloat  v.  Royal  Ins.  Co.,  49  Pa. 

N.  Y.   6    (1875);    Liscom  v.   Boston,  St.  14,  88  Am.  Dec.  477   (1865). 

etc.,   Ins.   Co.,    9    Met.    (Mass.)    205  "Clarke   v.    Western   Assur.    Co., 

(1845);    Quarrier    v.    Peabody    Ins.  146    Pa.    St.    561,    28    Am.    St.    821 

Co.,  10  W.  Va.  507   (1877);   Illinois,  (1892).     See    Joyce    Ins.,    §§    2472, 

etc.,  Ins.  Co.  v.  Fix,  53   111.   151,  5  2473. 

Am.   Rep.   38    (1820);    Phoenix   Ins.  4S  Washburn-Halligan,  etc.,   Co.  v. 


229 


INTEREST — CARE  OF  PROPERTY. 


251 


§  251.  Operation  of  manufacturing  establishment. — If  the  subject 
of  the  insurance  is  a  manufacturing  establishment,  and  it  is  operated 
in  whole  or  in  part  at  night  later  than  ten  o'clock,  or  if  it  cease?  to 
be  operated  for  more  than  ten  consecutive  days  without  the  consent 
of  the  company  indorsed  on  the  policy,  the  entire  contract  is  rendered 
invalid.47  A  breach  of  this  condition  renders  the  policy  immediately 
void,48  and  the  fact  that  a  watchman  is  employed  on  the  premises 
during  the  time  so  that  there  is  no  increase  of  risk,  is  immaterial.49 
Where  the  insured  goods  are  exclusively  personal  property,  such  as 
machinery  and  merchandise,  and  the  policy  provides  that  if  the 
property  "is  a  manufacturing  establishment"  the  non-operation  of  the 
establishment  will  avoid  the  policy,  such  non-operation  will  not  avoid 


Merchants',  etc.,  Ins.  Co.,  110  Iowa 
423,  81  N.  W.  707  (1900).  In  this 
case  the  court  said:  "The  authori- 
ties determining  when  the  insurance 
"is  double  throw  little  light  on  the 
question.  Besides,  these  are  in  con- 
flict, the  supreme  court  of  Pennsyl- 
vania holding  that  policies  in  order 
to  constitute  double  insurance  must 
cover  identically  the  same  property: 
Clarke  v.  Western  Assur.  Co.,  146 
Pa.  St.  561,  23  Atl.  248,  15  L.  R.  A. 
127  (1892);  while  that  of  New  York, 
in  overruling  an  earlier  case,  has  ad- 
judged it  double  insurance  if  one 
policy  includes  only  part  of  the 
property  covered  by  the  other:  Og- 
den  v.  East  River  Ins.  Co.,  50  N.  Y. 
388,  10  Am.  Rep.  492  (1872)." 

47  This  provision  is  found  in  the 
standard  policies  of  New  York,  New 
Jersey,  Connecticut,  Rhode  Island, 
Wisconsin,  Louisiana,  Iowa,  North 
Dakota,  South  Dakota,  Michigan 
and  North  Carolina.  The  policies  of 
Massachusetts,  Minnesota  and  Maine 
provide  that:  "This  policy  shall  be 
void  if  the  subject  of  the  insurance 
be  a  manufacturing  establishment, 
running  in  whole  or  in  part  extra 
time,  except  that  such  establish- 
ments may  run  in  whole  or  in  part 
extra  hours,  not  later  than  nine 


o'clock  P.  M.,  or  if  such  establish- 
ments shall  cease  operations  for 
more  than  thirty  days  without  per- 
mission in  writing  indorsed  hereon." 
The  New  Hampshire  policy  provides 
that:  "This  policy  shall  be  void 
during  the  existence  and  continu- 
ance of  things  stipulated  against  as 
follows:  *  *  *  if  the  subject  of 
the  insurance  be  a  manufacturing 
establishment  in  which  the  works 
or  machinery  are  operated  more 
than  the  customary  or  legal  hours, 
or  all  night,  without  the  written  or 
printed  assent  of  this  company 
thereto,  except  that  permission  is 
hereby  given  to  operate  machinery 
extra  hours,  not  later  than  10 
o'clock  P.  M.,  for  the  purpose  of 
equalizing  work,  a  competent  man 
other  than  the  regular  watchman 
being  kept  in  charge  of  those  rooms 
in  which  shafting  and  belts  are  run- 
ning, but  where  the  machinery  is 
not  at  work;  or  if  such  establish- 
ment shall  cease  operation  for  more 
than  thirty  days  without  permission 
in  writing  indorsed  thereon." 

48  Cronin  v.  Fire  Ass'n,  123  Mich. 
277,  82  N.  W.  45  (1900). 

49  Dover  Glass  Works  Co.  v.  Amer- 
ican F.  Ins.  Co.,  1  Marvel  (Del.)  32, 
29  Atl.  1039,  65  Am.  St.  264  (1895). 


§    251  THE    STANDARD   POLICY.  230 

the  policy  on  the  machinery.*0  A  description  of  the  insured  prop- 
erty as  a  distillery  is  not  a  representation  that  it  is  being  operated 
as  such.51  This  provision  is  not  broken  by  a  temporary  suspension 
of  business,  as  the  contract  must  be  construed  in  the  light  of 
the  customary  methods  of  conducting  a  manufacturing  establish- 
ment.52 Thus,  a  policy  upon  a  sawmill  run  by  water  is  not  in- 
validated by  delays  and  interruptions  incident  to  the  business  caused 
by  low  water,  diminished  custom,  or  derangement  of  machin- 
ery.53 In  one  case  the  court  defined  the  meaning  of  the  words, 
"ceased  to  be  operated,"  as  follows  :54  "The  operation  of  a  large  man- 
ufacturing establishment  means  doing  everything  necessary  to  its 
successful  and  profitable  management.  It  would  necessarily  be  the 
work  of  many  hands,  and  the  operation  would  be  multiplied  many 
fold.  The  duties  of  the  many  employes  would  be  quite  dissimilar 
and  entirely  independent  of  each  other,  but  all  necessary  to  either  the 
profitable  or  successful  operation  of  the  factory.  *  *  *  The 
ceasing  to  perform  any  one  thing  for  the  time  being  of  the  many 
required  to  be  done  would  certainly  not  be  to  cease  to  operate  the  fac- 
tory. Any  one  might  be  temporarily  suspended  and  yet  the  factory  be 
said  to  be  in  successful  operation.  *  *  *  The  operating  of  an  exten- 
sive factory  does  not  mean  that  it  shall  be  kept  employed  in  all  its 
various  departments  every  da£ — that  is,  all  the  time.  *  *  *  It 
may  properly  be  closed  down  over  Sundays  and  all  legal  holidays,  or 
for  any  cause  that  a  prudent  manager  of  such  an  establishment  would 
deem  prudent  and  best  for  the  interests  of  the  owners.  On  the 
same  principle,  one  department  may  be  kept  in  operation  and  others 
cease  temporarily.  It  might  be  the  fabrics  manufactured  might  be 
in  excess  of  the  sales  or  demands  of  the  trade,  and  for  that  reason 
a  prudent  superintendent  might  deem  it  best  to  stop  the  spindles 
and  the  looms  for  a  season ;  or  the  sales  might  be  in  excess  of  the  sup- 
plies, and  for  that  reason  no  goods  would  be  contracted  for  a  time. 
Would  any  one  say  that  such  a  partial  stoppage  would  be  a  violation 

Thenix  Ins.  Co.  v.  Holcombe,  57  72  N.  Y.  117    (1878);    Rosecrans  v. 

Neb.    622,    73   Am.    St.    532    (1899);  North  Amer.  Ins.  Co.,  66  Mo.  App. 

Halpin  v.  JEtna,  F.  Ins.  Co.,  120  N.  352  (1896);  Glendale  Woolen  Co.  v. 

Y.  73,  23  N.  E.  989,  8  L.  R.  A,  79  Protection    Ins.    Co.,    21    Conn.    19 

(1890).  (1850);  Luce  v.  Dorchester,  etc.,  Ins. 

51Louck  v.  Orient  Ins.  Co.,  176  Pa.  Co.,  105  Mass.  297  (1870). 
St.  638,  33  L.  R.  A.  712  (1896).  "American  F.  Ins.  Co.  v.  Brighton 

52  Lebanon,  etc.,  Ins.  Co.  v.  Leath-  Cotton  Mfg.  Co.,  125  111.  131,  17  N.  B. 
ers  (Pa.),  8  Atl.  424  (1887).  771  (1888). 

53  Whitney  v.  Black  River  Ins.  Co., 


231  INTEREST CARE  OF  PROPERTY.  §  251 

of  the  contract  of  insurance  contained  in  the  policy  in  suit?  So 
narrow  a  construction  would  make  the  contract  of  no  value  to  the 
assured,  and  to  observe  it  would  render  the  usual  and  ordinary  man- 
agement of  such  establishments  impracticable."  It  was  further  held 
that  the  temporary  suspension  of  a  large  portion  of  the  works  was 
permissible  within  the  terms  of  the  contract. 

Within  this  rule  the  temporary  cessation  of  the  operation  of  the 
machinery  of  a  sawmill  during  the  illness  of  the  sawyer,  the  other 
business  going  on  as  usual,  does  not  violate  the  condition.55  So, 
the  closing  of  a  mill  for  forty-two  days  without  notice  to  the  in- 
surers, occasioned  by  the  want  of  logs,  which  are  daily  expected  but 
detained  by  low  water,  will  not  avoid  a  policy  conditioned  to  become 
void  "if  the  mill  should  cease  to  be  operated  without  notice  to  or 
consent  of  the  company."56  The  court  said:  "It  must  mean  a 
closing  with  the  intention  of  ceasing  operation,  not  the  shutting 
down  for  a  few  days  or  weeks  because  of  the  happening  of  an  event 
incident  to  the  conducting  of  the  mill  in  that  locality,  which  could 
reasonably  be  expected."  Where  the  insurance  was  upon  a  tannery 
it  appeared  that  for  some  time  prior  to  the  fire  the  insured  had  not 
done  any  tanning  in  the  shops  connected  with  the  property  because 
of  want  of  material.  He  was  negotiating  with  parties  for  hides 
and  stocks,  and  had  given  orders,  but  they  had  not  been  filled  when 
the  fire  occurred.  But  during  all  the  time  the  property  was  occupied 
and  used  as  a  tannery;  bark  was  purchased,  prepared  and  placed  in 
the  sheds,  liquors  were  kept  in  the  vats  ready  for  use,  and  the 
machinery  and  tools  all  remained  on  the  premises.  It  was  held  that 
the  mere  temporary  suspension  of  the  business  for  the  purpose  of  re- 
pairing and  for  the  want  of  a  supply  of  material  was  not  "ceasing  to 
operate  the  establishment"  within  the  meaning  of  the  policy.57  But 
a  sawmill  which  has  stopped  running  for  the  winter  is  "shut  down," 
although  men  are  employed  in  and  about  the  premises  in  shipping 
lumber.58  Where  the  policy  contained  a  condition  that  "should  any 
mill  insured  by  this  company  be  shut  down  or  remain  idle  from  any 
cause  whatever  more  than  twenty  days  continuously,"  it  should  be 

55  Ladd  v.  .£Dtna  Ins.  Co.,  147  N.  Y.  '•"  Lebanon  Mut.  Ins.  Co.  v.  Leath- 

478,  42  N.  E.  197  (1895).  ers   (Pa.),  8  Atl.  424,  Woodruff  Ins. 

511  City   Planing,   etc.,    Co.    v.    Mer-  Cas.   172    (1887);    American  P.   Ins. 

chants',  etc.,  Ins.  Co.,  72  Mich.  654,  Co.  v.  Brighton,  etc.,  Mfg.  Co.,  125 

16  Am.  St.  552  and  note  (1888).   See,  111.  131  (1888). 

also,  note  to  Moore  v.  Pluenix  Ins.  58  McKenzie  v.  Scottish,  etc.,  Ins., 

Co.,  10  Am.  St.  390,  396  (1886).  112  Cal.  548,  44  Pac.  922  (1896). 


§    252  THE    STANDARD    POLICY.  232 

void,  it  was  held  that  shutting  down  for  the  purpose  of  making  neces- 
sary repairs  suspended  the  policy,  as  this  language  included  and 
covered  any  and  every  cause  that  might  have  the  effect  to  stop  the 
operation  of  the  mill.59  So,  under  the  Massachusetts  policy,  which 
provides  for  forfeiture  if  the  establishment  ceases  operation  for  more 
than  thirty  days,  it  was  held  that  the  stoppage  of  the  machinery 
for  four  months  and  the  discharge  of  the  employes  forfeited  the  policy 
on  the  building  and  machinery,  although  the  company  knew  that  it 
was  usual  thus  to  stop  business  in  the  dull  season.60 

A  manufacturing  establishment  has  not  ceased  to  be  operated 
within  the  meaning  of  this  provision  where,  after  the  operation  of  the 
machinery  ceased,  and  while  the  premises  were  occupied  by  a  foreman 
who  was  engaged  in  putting  together  and  selling  engines  and  other 
articles  belonging  to  the  estate,  the  policy  was  renewed  at  the  re- 
quest of  the  assignees  for  the  benefit  of  the  insured's  creditors.61 

§  252.  Running  over  hours. — The  provision  which  prohibits  the 
operation  of  the  establishment  after  ten  o'clock  at  night  without  the 
consent  of  the  company  is  valid  and  binding,  but  may  be  waived  by 
the  insurance  company.  Thus,  an  agent  of  a  fire  insurance  company 
agreed  to  insure  a  factory,  and  after  having  knowledge  that  it  was 
operated  at  night  after  ten  o'clock,  as  well  as  in  the  day,  delivered  the 
policy  containing  this  condition,  and  also  a  provision  that  no  agent  of 
the  company  should  have  power  to  waive  any  of  the  provisions  ex- 
cept by  means  of  a  written  agreement  indorsed  on  the  policy.  It 
was  held  that  by  issuing  the  policy  with  this  knowledge  the  provision 
was  waived.62  Where  the  prohibition  is  merely  against  running  extra 
hours  the  policy  is  not  rendered  void  because  the  mill  is  sometimes 
run  at  night.63  A  permit  to  operate  the  establishment  over  hours 
for  a  certain  designated  time  expires  by  the  expiration  of  the  time, 
and  it  is  not  necessary  that  the  company  should  do  anything  for  the 

59  Day  v.   Mill  Owners',   etc.,   Ins.  e2  Improved    Match   Co.   v.    Michi- 

Co.,    70    Iowa    710,    29    N.    W.    443  gan,  etc.,  Ins.  Co.,  122  Mich.  256,  80 

(1886);   Brighton  Mfg.  Co.  v.  Read-  N.  W.  1088  (1899). 

ing  F.  Ins.  Co.,  33  Fed.  232  (1887).  U3  German,  etc.,  Ins.  Co.  v.  Steiger, 

90  Stone  v.  Howard  Ins.  Co.,  153  109  111.  254  (1884).  For  the  con- 
Mass.  475,  27  N.  E.  6,  11  L.  R.  A.  struction  of  similar  provisions,  see 
771  (1891).  North  Berwick  Co.  v.  New  England, 

61  Bole  v.  New  Hampshire  F.  Ins.  etc.,    Ins.    Co.,    52    Me.    336    (1864); 

Co.,    159    Pa.    St.    53,    28    Atl.    205  Bilbrough  v.  Metropolitan  Ins.  Co., 

(1893).  5  Duer  (N.  Y.)  587  (1856). 


233 


INTEREST — CARE  OF  PROPERTY. 


253 


purpose  of  reviving  the  condition.  A  policy  was  upon  a  building 
described  as  occupied  principally  for  the  making  of  certain  articles, 
and  stated  that  in  consideration  of  the  sum  named  and  "extra  pre- 
mium/' permission  was  given  to  work  nights  for  four  months  from 
date.  There  was  a  printed  condition  to  the  effect  that  if  the  property 
insured  "be  a  manufacturing  establishment  running  in  whole  or 
in  part  over  Or  extra  time,  or  at  night,  without  special  agreement 
indorsed  on  this  policy/'  the  policy  shall  be  void.  The  building  was 
destroyed  by  fire  while  the  factory  was  being  operated  in  the  night- 
time after  the  expiration  of  the  four  months  from  the  date  of  the  pol- 
icy, and  it  was  held  that  an  action  could  not  be  maintained.64 

§  253.  Increase  of  risk. — A  policy  is  rendered  void  if  the  hazard 
be  increased  by  any  means  within  the  control  or  knowledge  of  the 
insured.65  This  is  merely  a  recognition  of  a  general  principle  of  in- 
surance which  arises  out  of  the  nature  of  the  contract.66  There  are 


04  Reardon  v.  Faneuil  Hall  Ins.  Co., 
135  Mass.  121  (1883);  Betcher  v. 
Capital  F.  Ins.  Co.,  78  Minn.  240 
(1899). 

65  This  provision  is  found  in  the 
standard  policies  of  New  York,  New 
Jersey,  Connecticut,  Rhode  Island, 
Louisiana,  Wisconsin,  Michigan, 
North  Dakota,  South  Dakota,  Iowa, 
and  North  Carolina.  The  New 
Hampshire  clause  is  as  follows: 
"This  policy  shall  be  void  and  in- 
operative during  the  existence  or 
continuance  of  the  acts  or  condi- 
tions of  things  stipulated  against 
as  follows:  *  *  *  if  without 
such  assent,  the  situation  or  circum-' 
stances  affecting  the  risk,  shall,  by 
or  with  the  knowledge,  advice, 
agency  or  consent  of  the  insured, 
be  so  altered  as  to  cause  an  increase 
of  such  risk."  The  Maine  and  Massa- 
chusetts forms  are  as  follows:  "This 
policy  shall  be  void  if  without  the 
assent  in  writing  or  in  print  of  the 
company,  the  situation  or  circum- 
stances affecting  the  risk  shall,  by  or 
with  the  knowledge,  advice,  agency 


or  consent  of  the  insured,  be  so  al- 
tered as  to  cause  an  increase  of  such 
risks."  The  Minnesota  form  is  as 
follows:  "The  policy  shall  be  void 
if  without  such  assent  the  situation 
or  circumstances  affecting  the  risk 
shall,  by  or  with  the  knowledge,  ad- 
vice, agency  or  consent  of  the  in- 
sured, be  so  altered  as  to  cause  an 
increase  of  such  risks."  The  Iowa 
policy  provides  further  that:  "It  is 
understood,  and  the  insured  by  the 
acceptance  of  this  policy  so  agrees, 
that  a  removal  of  the  property,  or 
any  part  thereof,  without  notice  to, 
and  the  consent  of  the  company  en- 
dorsed hereon  in  writing  or  attached 
hereto,  except  in  case  of  fire,  or  any 
change  of  use,  or  any  change  in 
occupancy  (except  change  of  ten- 
ants without  increase  of  hazard),  is 
in  each  instance  an  increase  of  haz- 
ard within  the  meaning  of  section 
1743,  Code  of  Iowa." 

60Boatwright  v.  ^tna  Ins.  Co.,  I 
Strob.  (S.  C.)  281  (1847);  Hoffecker 
v.  New  Castle,  etc.,  Ins.  Co.,  5  Houst. 
(Del.)  101  (1875). 


§    253  THE    STANDARD   POLICY.  234 

innumerable  methods  by  which  the  insured  may  so  change  the  con- 
ditions which  existed  when  the  contract  was  made  as  to  impose  new 
and  uncontemplated  risks  upon  the  insurer.  It  may  be  by  actual 
changes  in  the  physical  structure  or  use  of  the  property,  or  by  the  in- 
troduction of  new  customs  or  methods  of  doing  business,  or  by  the  dis- 
continuance of  certain  precautions  which  were  understood  by  the 
insurer  to  be  in  use,  such  as  the  keeping  of  a  watchman.67  Where 
the  provision  is  violated  the  contract  is  avoided  or  suspended  without 
reference  to  the  actual  cause  of  the  loss.68  It  is  only  such  changes 
as  increase  the  risk  which  violate  the  condition,  and  the  question  of 
increase  of  hazard  is  for  the  determination  of  the  jury.69  Thus, 
whether  the  erection  of  a  grocery  store  by  another  party  near  the 
property  of  the  insured  creates  such  a  substantial  increase  of  the  risk 
as  to  avoid  the  policy  is  for  the  jury.70  But  the  court  will  take  judi- 
cial notice  of  the  fact  that  the  storing  of  fireworks  in  a  building  in- 
creases the  risk.71 

The  provision  must  be  given  a  reasonable  construction.  It  is  not 
broken  by  every  act  which  in  any  degree  increases  the  risk.  It  refers 
to  an  alteration  or  change  of  a  durable  nature,  not  to  a  casual  change 
of  a  temporary  character,  such  as  the  careless  use  of  kerosene  in  start- 
ing a  fire  in  a  stove,72  or  a  mere  temporary  use  of  a  threshing  machine 
for  a  few  hours  on  the  premises  where  the  insured  property  is  lo- 
cated.73 Starting  a  fire  near  the  insured  building  for  the  purpose  of 
burning  some  rubbish,  which  is  communicated  to  the  building,  is  not 
such  an  increase  of  the  risk  or  hazard  as  will  avoid  the  contract  where 
there  was  no  design  to  burn  the  building.74  So,  a  clause  with  refer- 
ence to  storing  hazardous  goods  is  intended  to  prevent  a  building  from 
being  used  for  the  ordinary  deposit  of  such  articles,  and  not  for  their 

67  Houghton      v.      Manufacturers',         71  Betcher  v.  Capital  F.  Ins.  Co.,  78 
etc.,  Ins.  Co.,  8  Met.  (Mass.)  114,  41     Minn.  240  (1899). 

Am.  Dec.  489    (1844);    Diehl  v.  Ad-         T- Angier  v.  Western  Assur.  Co.,  10 

ams,  etc.,  Ins.  Co.,  58  Pa.  St.  443,  98  S.  D.  82,  66  Am.  St.  685  (1897). 
Am.  Dec.  302  (1868).  "  Adair  v.  Southern,  etc.,  Ins.  Co., 

68  Martin    v.    Capital    Ins.    Co.,    85  107  Ga.  297,  73  Am.  St.  122,  45  L.  R. 
Iowa    643,    52    N.    W.    534     (1892);  A.  204,  33  S.  E.  78   (1899);   Leggett 
Howell  v.  Baltimore  Eq.  Soc.,  16  Md.  v.  .Etna  Ins.  Co.,  10  Rich.  L.  (S.  C.) 
377   (1860).  202   (1856). 

09  Pool  v.  Milwaukee,  etc.,  Ins.  Co.,  74  Des  Moines  Ice  Co.  v.  Niagara 

91  Wis.  530,  51  Am.  St.  91i>  (1895).  F.  Ins.  Co.,  99  Iowa  193,  68  N.  W. 

70Jauvrin     v.     Rockingham,     etc.,  600   (1896). 
Ins.  Co.  (N.  H.),  46  Atl.  686  (1900). 


235  INTEREST — CARE  OF  PROPERTY.  §  253 

casual  introduction  for  a  temporary  purpose,  such  as  the  making  of 
reasonable  repairs.75 

The  question  of  materiality  is  ordinarily  determined  by  its  effect 
upon  the  rate  of  premium,  but  this  is  not  conclusive.70  Thus,  it  has 
been  held  that  the  mere  fact  that  the  rate  on  property  used  in  the 
restaurant  business  is  higher  than  that  on  the  same  property  when 
used  in  the  confectionery  and  ice  cream  business  is  not  conclusive  that 
a  change  from  the  latter  to  the  former  business  is  an  increase  of  the 
hazaxd.77 

There  are  many  cases  illustrating  the  construction  of  this  provision, 
but  from  its  nature  it  is  impossible  to  deduce  general  principles, 
and  each  case  must  be  determined  upon  its  own  facts.  Changes  in  the 
form  of  an  existing  lien  do  not,  as  a  matter  of  law,  amount  to  an  in- 
crease of  hazard.  Thus,  if  the  property  against  which  mechanics' 
liens  have  been  filed  is  insured,  a  forfeiture  of  the  liens  and  the  sale 
of  the  property  under  execution  does  not,  in  the  absence  of  other  evi- 
dence, show  an  increase  of  the  hazard.78 

The  provision  is  violated  by  the  introduction  of  an  invention  which 
materially  increases  the  risk.79  Increase  of  hazard  must  be  presumed 
from  the  erection  of  a  wooden  building  but  a  few  feet  distant  from 
the  insured  premises,  but  in  this  case  the  contract  contained  a  continu- 
ing warranty  that  there  was  no  exposure  of  the  building  on  that  side 
by  any  structure  or  occupancy  within  one  hundred  feet,  which  was 
considered  as  an  agreement  that  such  non-exposure  was  material  to 
the  risk,  and  should  continue  during  the  life  of  the  policy.80  The 
use  of  a  building  insured  as  a  dwelling  house,  for  the  illegal  sale  of 
intoxicating  liquors,  does  not,  as  a  matter  of  law,  increase  the  risk.81 
It  was  held  in  Michigan  that  the  burning  off  of  paint  from  a  building 
with  a  gasoline  torch,  according  to  the  custom  of  painters,  does  not, 

75O'Niel  v.  Buffalo  F.   Ins.  Co.,  3  Tex.    Civ.    App.    147,    50    S.    W.    180 

N.   Y.    122    (1849);    Hears   v.    Hum-  (1898). 

boldt  Ins.  Co.,  92  Pa.  St.  15,  37  Am.  7S  Greenlee  v.  North  British,  etc., 

Rep.  647  (1879);  Faust  v.  American  Ins.  Co.,   102  Iowa  427,   63  Am.   St. 

F.  Ins.  Co.,  91  Wis.  158,  64  N.  W.  883  455  (1897). 

(1895);    Fraim  v.   National   F.   Ins.  "Washington    Mut.    Ins.    Co.    v. 

Co.,  170  Pa.  St.  151  (1895).  Manufacturers',  etc.,  Ins.  Co.,  5  Ohio 

78  See     note     to     Collins    v.     Mer-  St.  450  (1856). 

chants',  etc.,  Ins.  Co.,  58  Am.  St.  441  80  Straker  v.  Phenix  Ins.  Co.,  101 

(-1895).  Wis.  413,  77  N.  W.  752  (1898). 

77  Sun   Mut.   Ins.   Co.   v.   Tufts,   20  81  Martin    v.    Capital    Ins.    Co.,    85 

Iowa  643,  52  N.  W.  534  (1892). 


§    254  THE    STANDARD   POLICY.  236 

as  a  matter  of  law,  increase  the  hazard.82  But  in  Massachusetts  the 
same  acts  were  held  to  be  an  "alteration  in  the  situation  or  circum- 
stances affecting  the  risk,"  and  hence  invalidated  the  policy.83  Where 
there  are  two  or  more  changes,  and  one  increases  the  risk,  it  is  im- 
material that  the  other  diminishes  it.84  A  sale  by  one  partner  to  the 
other  of  his  interest  in  the  property  is  not  a  violation  of  this  pro- 
vision.85 

§  254.  Changes  in  adjoining  property. — This  provision  of  the  pol- 
icy does  not  in  terms  refer  to  alterations  in  adjacent  buildings.  Such 
premises  are  not  under  the  control  of  the  insured,  but  if  he  has 
knowledge  of  material  changes,  he  certainly  should  inform  the  insurer 
of  the  facts.  But  the  erection  of  a  building  on  a  lot  adjoining  that 
on  which  the  insured  building  is  located,  which  belongs  to  another 
party,  and  is  in  no  manner  under  the  control  of  the  insured,  is  not 
within  the  provision  in  the  policy  that  it  shall  be  void  if  the  risk  is 
increased  in  any  manner,  except  by  the  erection  and  use  of  ordinary 
outbuildings.88 

A  policy  which  was  payable  to  a  mortgagee  contained  a  provision 
that  it  should  be  void,  in  case  of  "increase  of  hazard  by  the  erection 
of  neighboring  buildings."  By  the  terms  of  a  mortgage  clause  in  the 
policy,  the  mortgagee's  interest  was  not  to  be  invalidated  by  any  act 
or  neglect  of  the  mortgagor.  The  renewal  clause  in  the  policy  pro- 
vided that  "in  case  there  shall  have  been  an  increase  in  the  hazard,  it 
must  be  made  known  to  the  company  by  the  assured  at  the  time  of 
the  renewal ;  otherwise  this  policy  shall  be  void."  After  the  contract 
by  its  terms  expired,  a  loss  occurred,  and  it  was  claimed  that  there 
had  been  a  renewal.  It  appeared  that  during  the  life  of  the  original 
policy  the  insured  erected  a  building  near  the  one  insured,  which  in- 
creased the  hazard,  and  that  the  agent  who  obtained  the  alleged  re- 
newal for  the  owner  and  mortgagee  knew  of  this  fact,  but  failed  to 
disclose  it.  It  was  held  that  the  knowledge  of  the  agent  was  charge- 
able to  his  principal,  and  that  his  failure  to  disclose  the  hazard  ren- 

82  Smith  v.  German  Ins.  Co.,  107  **  Albion  Lead  Works  v.  Williams- 
Mich.  270,  65  N.  W.  236,  30  L.  R.  A.  burg,  etc.,  Ins.  Co.,  2  Fed.  479  (1880). 
368  (1895).  » Powers  v.  Guardian,  etc.,  Ins. 

"First  Cong.  Church  v.  Holyoke,  Co.,  136  Mass.  108,  49  Am.  Rep.  20 

etc.,  Ins.  Co.,  158  Mass.  475,  33  N.  E.  (1883). 

572,  35  Am.  St.  508  (1893).  *  German    Ins.    Co.    v.    Wright,    6 

Kan.  App.  611,  49  Pac.  704   (1897). 


237  INTEREST CARE  OF  PROPERTY.  §  255 

dered  the  policy  void.  The  clause  in  the  mortgage  protecting  the 
mortgagee  against  any  act  or  neglect  of  the  mortgagor  or  owner  did 
not  apply,  as  it  was  the  mortgagee's  own  act  which  rendered  the 
policy  void.87 

§  255.  Effect  of  increase  of  hazard. — In  some  states  it  is  held  that 
a  violation  of  the  condition  against  an  increase  of  hazard  renders  the 
policy  void,  while  others  hold  that  the  effect  is  merely  to  suspend  the 
contract  during  the  time  the  risk  is  increased.88  Thus,  in  Illinois  it 
is  said  to  be  the  settled  law  that,  under  a  provision  that  the  policy 
shall  be  void  in  case  of  a  change  made  in  the  property  increasing 
the  hazard,  if  such  changes  are  made,  and  the  policy  has  not  been  de- 
clared forfeited,  and  the  changed  conditions  cease  to  exist,  leaving 
the  risk  no  more  hazardous  than  before,  the  policy  again  becomes  in 
force.89  A  recovery  may  thus  be  had  for  loss  subsequently  occurring 
to  which  the  more  hazardous  use  did  not  contribute.  But  many 
courts  hold  that  a  violation  of  this  condition  renders  the  policy  void. 
In  a  Massachusetts  case  it  appeared  that  the  hazard  had  been  increased 
by  the  use  of  the  building  for  the  illegal  sale  of  intoxicating  liquors 
with  the  knowledge  and  consent  of  the  insured.  The  court  said:90 
"The  question  is  thus  presented  whether  the  provision  of  the  policy 
that  it  shall  be  void  in  case  of  an  increase  of  the  risk  means  that  it 
shall  be  void  only  during  the  time  while  the  increase  of  risk  may 
last,  and  may  revive  again  upon  the  termination  of  the  increase 
of  the  risk.  The  provision  is  that  the  policy  shall  be  void  if  any 
one  of  several  circumstances  successively  enumerated  shall  be  found  to 
exist.  Some  of  these  circumstances  relate  to  the  time  of  issuing  the 
policy,  and  others  could  not  arise  till  afterwards.  They  are  of  dif- 
ferent degrees  of  importance,  some  of  them  going  to  essential  matters 
of  the  contract  and  others  being  comparatively  trivial  in  character. 

87  Cole   v.    Germania   F.    Ins.    Co.,  Assur.  Co.,  149  Mass.  116,  Woodruff 
99  N.  Y.  36  (1885);  Mechanics'  Ins.  Ins.  Cas.  142  (1889).    See  Concordia 
Co.  v.  Hodge,  149  111.  298,  37  N.  E.  P.  Ins.  Co.  v.  Johnson,  4  Kan.  App. 
51  (1894).  7,  45  Pac.  722  (1896).    As  to  the  ef- 

88  As  to  effect  of  breach  of  condi-  feet   of   the   temporary   use   of   the 
tions,  see  §  205,  supra.  premises,  see  Hinckley  v.  Germania 

89  Traders'  Ins.  Co.  v.  Catlin,  163  F.  Ins.  Co.,  140  Mass.  38,  1  N.  E.  737, 
111.  256,  35  L.  R.  A.  595  (1895);  New  54  Am.  Rep.  445  (1885);  Jennings  v. 
England,  etc.,  Ins.  Co.  v.  Wetmore,  Chenango,    etc.,    Ins.    Co.,    2    Denio 
32  111.  222  (1863).  (N.  Y.)  75  (1846). 

TOKyte      v.      Commercial      Union 


§    256  THE    STANDARD    POLICY.  238 

The  language  of  the  policy  is  the  same  with  respect  to  them  all,  that 
the  policy  shall  be  void.  *  *  *  we  think  an  increase  of  risk  en- 
titles the  insurer  to  avoid  the  policy  absolutely.  A  contract  of  in- 
surance depends  essentially  upon  the  adjustment  of  the  premium  to 
the  risk  assumed.  If  the  assured  by  his  voluntary  act  increases  the 
risk,  and  the  fact  is  not  known,  the  result  is  that  he  gets  an  insurance 
for  which  he  has  not  paid.  In  its  effect  upon  the  company  it  is  not 
much  different  from  misrepresentation  of  the  condition  of  the  prop- 
erty. If  the  provision  stood  alone,  that  in  case  of  any  material  mis- 
representation as  to  the  risk  or  any  voluntary  increase  of  the  risk 
afterwards,  the  policy  should  be  void,  it  could  hardly  be  doubted  that 
the  words  should  te  taken  in  their  natural  obvious  meaning.  The 
fact  that  with  this  are  coupled  the  other  provisions  above  referred 
to  does  not  change  its  meaning  with  reference  to  the  effect  and  conse- 
quence of  an  increase  of  the  risk.  An  increase  of  risk  which 
is  substantial,  and  which  is  continued  for  a  considerable  period  of 
time,  is  a  direct  and  certain  injury  to  the  insurer  and  changes  the 
basis  upon  which  the  contract  of  insurance  rests ;  and,  since  there  is  a 
provision  that  in  case  of  a  risk  which  is  consented  to  or  known  by  the 
insured,  and  not  disclosed  and  the  assent  of  the  assurer  obtained,  the 
policy  shall  become  void,  we  do  not  feel  at  liberty  to  qualify  the  mean- 
ing of  these  words  by  holding  that  the  policy  is  only  suspended  dur- 
ing the  continuance  of  such  increase  of  risk." 

Expert  evidence  can  not  be  received  for  the  purpose  of  showing  that 
leaving  a  dwelling  house  unoccupied  for  a  considerable  length  of 
time  increases  its  liability  to  be  destroyed  or  injured  by  fire,  but  per- 
sons who  are  familiar  with  the  business  of  insurance  may  testify 
whether  such  conditions  affect  the  rate  of  premium.91 

§  256.  Repairs — Employment  of  mechanics. — The  entire  policy, 
unless  otherwise  provided  by  agreement  indorsed  thereon,  shall  be 
void  if  mechanics  be  employed  in  building,  altering  or  repairing  the 
described  premises  more  than  fifteen  days  at  any  one  time.92 

When  a  building  is  insured  it  is  implied  that  it  will  be  used  in  the 

81  Luce  v.  Dorchester,  etc.,  Ins.  Co.,  Iowa,  Wisconsin,  Michigan,  North 

105  Mass.  297  (1870).  Dakota,  South  Dakota,  and  North 

92  This  provision  is  found  in  the  Carolina.  It  is  not  found  in  the 

standard  policies  of  the  following  standard  policies  in  use  in  Maine, 

states:  New  York,  New  Jersey,  Con-  Massachusetts,  New  Hampshire  and 

necticut,  Rhode  Island,  Louisiana,  Minnesota. 


239  INTEREST — CARE  OF  PROPERTY.  §  256 

ordinary  way  in  which  similar  buildings  are  used  and  not  set  apart 
and  wholly  devoted  to  being  kept  safely.  One  of  the  incidents  of  such 
use  is  that  of  making  ordinary  repairs,  and  the  general  right  to  make 
such  repairs  is  not  questioned  when  the  policy  contains  no  special 
provision  upon  the  subject.93  A  clause  similar  to  that  in  the  stand- 
ard policy  was  held  not  to  apply  to  ordinary  and  necessary  repairs, 
as  it  would  be  unreasonable  to  assume  that  in  order  to  protect  a  build- 
ing from  fire  it  was  the  intention  to  provide  for  its  destruction  by 
the  other  elements.04 

The  limitation  is  rendered  more  definite  and  reasonable  by  a  time 
limit,  and  when  it  appears  that  mechanics  have  been  employed  in 
making  repairs  for  more  than  fifteen  days  the  policy  is  invalid  with- 
out reference  to  whether  such  changes  contributed  to  the  loss.95 
Painters  employed  in  repainting  a  building  are  not  mechanics  within 
this  provision.90  A  similar  provision  was  given  full  force  and  effect 
by  the  Supreme  Court  of  the  United  States.  The  policy  was  to  be 
void  and  of  no  effect  if,  without  notice  to  the  company  and  permission 
in  writing  indorsed  thereon,  "mechanics  are  employed  in  building, 
altering  or  repairing  the  premises  named  herein,  except  in  dwelling 
houses,  where  not  exceeding  five  days  in  any  one  year  are  allowed 
for  repairs."  The  insurance  was  upon  a  courthouse,  and  it  was 
held  invalidated  by  the  employment  of  mechanics  altering  or  repair- 
ing the  building,  although  the  fire  did  not  occur  in  consequence  of 
such  alterations  and  repairs.  The  court  said:97  "These  provisions 
are  not  unreasonable.  The  insurer  may  have  been  willing  to  carry 
the  risk  at  the  rate  charged  and  paid,  so  long  as  the  premises  con- 
tinued in  the  condition  in  which  they  were  at  the  date  of  the  con- 
tract; but  the  company  may  have  been  unwilling  to  continue  the  con- 
tract under  other  and  different  conditions,  and  so  it  had  the  right 
to  make  the  above  stipulations  and  conditions  on  which  the  policy 
or  the  contract  should  terminate.  These  terms  and  conditions  of 
the  policy  present  no  ambiguity  whatever.  The  several  conditions 

83  Townsend  v.  Northwestern  Ins.  M  Smith  v.   German   Ins.   Co.,   107 

Co.,  18  N.  Y.  168   (1858).  Mich.   270,  30  L.  R.  A.   368    (1895). 

94  Franklin  F.  Ins.  Co.  v.  Chicago  See  First  Cong.  Church  v.  Holyoke, 
Ice  Co.,  36  Md.  102  (1872).  etc.,  Ins.  Co.,  158  Mass.  475,  19  L.  R. 

95  Newport     Improvement     Co.     v.  A.  587  (1893). 

Home  Ins.  Co.,  163  N.  Y.  237,  57  N.         97  Imperial    F.    Ins.    Co.    v.    Coos 
E.  475  (1900);  Chamberlain  v.  Brit-     County,  151  U.  S.  452  (1893). 
ish,  etc.,  Assur.  Co.,  80  Mo.  App.  589 
(1899). 


§    256  THE    STANDARD    POLICY.  240 

were  separate  and  distinct,  and  wholly  independent  of  each  other. 
The  first  three  of  the  above  conditions  depend  upon  an  actual  in- 
crease of  the  risk  by  some  act  or  conduct  on  the  part  of  the  insured ; 
but  the  last  condition  is  disconnected  entirely  from  the  former, 
whether  the  risk  be  increased  or  not  [this  last  condition  refers  to 
mechanics  employed  in  the  building].  This  last  condition  may 
properly  be  construed  as  if  it  stood  alone,  and  a  material  alteration 
and  repair  of  the  building  beyond  what  was  incidental  to  the  ordi- 
nary repairing  necessary  for  its  preservation,  without  the  consent  of 
the  insurer,  would  be  a  violation  of  the  condition  of  the  policy,  even 
though  the  risk  might  not  have  been  in  fact  increased  thereby. 
*  *  *  Being  a  separate  and  valid  stipulation  of  the  parties,  its 
violation  by  the  assured  terminated  the  contract  of  the  insurer,  and 
it  could  not  thereafter  be  made  liable  on  the  contract  without  having 
waived  that  condition,  merely  because,  in  the  opinion  of  the  court  and 
the  jury,  the  alterations  and  repairs  of  the  building  did  not  in  fact 
increase  the  risk.  The  specific  thing  described  in  the  last  condition 
as  avoiding  the  policy  if  done  without  consent  was  one  which  the 
insurer  had  the  right  in  its  own  judgment  to  make  a  material  element 
of  the  contract,  and,  being  assented  to  by  the  assured,  it  did  not 
rest,  in  the  opinion  of  other  parties,  the  court  or  the  jury,  to  say  that 
it  was  immaterial  unless  it  actually  increased  the  risk." 

A  policy  contained  a  provision  that  the  "working  of  carpenters, 
roofers,  gas-fitters,  plumbers  and  other  mechanics  in  building,  alter- 
ing or  repairing,  in  the  building  or  buildings  covered  by  this  policy, 
will  cause  a  forfeiture  of  all  claims  under  this  policy,  without  the 
written  consent  of  this  company  indorsed  hereon;"  also,  that  the 
policy  should  be  void  if  the  risk  were  increased  by  any  means  within 
the  control  of  the  insured.  At  the  time  the  policy  was  issued  the 
building  was  occupied  as  a  grocery  store  by  a  tenant.  Some  time 
thereafter  the  insured  executed  a  lease  to  other  tenants,  who  con- 
templated changing  the  business  to  that  of  drying  fruit.  This  re- 
quired extensive  alterations  in  the  character  of  the  building,  and  it 
was  held  that  there  was  a  deliberate  attempt  to  change  the  character 
and  occupation  of  the  insured  building  from  a  comparatively  safe 
to  a  hazardous  one,  and  that  such  substantial  alterations  by  carpenters 
invalidated  the  policy.98  In  this  case  the  fire  which  destroyed  the 
building  occurred  while  the  alterations  were  being  made. 

98  Mack  v.  Rochester,  etc.,  Ins.  Co.,  106  N.  Y.  560,  Woodruff  Ins.  Cas.  173 

(1887). 


241  INTEREST CARE  OF  PROPERTY. 

This  provision  is  not  found  in  the  Massachusetts  form,  and  the 
subject  of  repairs  falls  under  the  general  claiise  relating  to  the  in- 
crease of  the  risk.  In  that  state  it  is' not  necessary  for  the  risk  to 
be  permanently  increased.  Where  the  lower  floors  of  the  premises 
were  changed  from  two  tenements  into  flats,  new  floors  laid,  doors 
changed  and  the  stairs  removed  to  the  outside  of  the  building,  it 
was  held  that  the  fact  that  the  alterations  were  completed  before  the 
loss  occurred  did  not  prevent  the  company  from  avoiding  the  policy 
because  of  such  breach."  Where  a  condition  of  the  policy  was  that 
it  should  be  void  "if  the  building  shall  be  altered,  enlarged,  or  ap- 
propriated to  any  other  purpose  than  that  herein  mentioned,  or  the 
risk  otherwise  increased,"  it  was  held  that  a  deliberate  and  consider- 
able alteration  of  the  building,  not  incidental  to  the  ordinary  use 
of  the  property,  made  by  the  tenant  with  the  knowledge  of  the  insured 
extending  over  three  weeks,  which,  while  it  lasted,  increased  the  risk, 
invalidated  the  policy,  although  it  did  not  permanently  increase  the 
risk  or  cause  the  fire.100  Where  the  policy  was  upon  a  "mill  build- 
ing and  additions,  including  flumes,  *  *  *  an(j  an  automatic 
sprinkler  equipment  complete,"  and  permission  was  given  to  make 
alterations,  additions  and  repairs  to  the  building  and  machinery, 
it  was  held  that  the  insured  might  remove  the  sprinkler  equipment 
for  the  purpose  of  putting  in  a  more  complete  one,  without  violating 
this  condition  of  the  policy.101  Placing  and  operating  an  engine 
fifty  feet  away  from  the  insured  building  is  not  an  alteration  of  the 
insured  property,  nor  does  it  violate  the  condition  against  an  increase 
of  the  risk  unless  expressly  so  provided  in  the  policy.102 

§  257.  Ownership. — If  the  interest  of  the  insured  is  other  than 
unconditional  and  sole  ownership  of  the  property,  the  fact  must  be 
disclosed  to  the  company.103  This  is  a  reasonable  provision  and  is 

98  Hill   v.    Middlesex,    etc.,   Assur.  103  This  is  found  in  the  standard 

Co.,    174    Mass.    542,    55    N.    E.    319  policies  of  New  Jersey,  Connecticut, 

(1899).  Rhode  Island,  North  Carolina,  Lou- 

100  Lyman  v.  State,  etc.,  Ins.  Co.,  14  isiana,    Iowa,    North    Dakota,    New 
Allen  (Mass.)  329  (1867).  York,  Sout^  Dakota,  Wisconsin,  and 

101  Firemen's  Ins.  Co.  v.  Appleton,  Michigan.     It  is  not  found  in  the 
etc.,   Co.,   161   111.   9,   43   N.   E.   713  standard  policies  of  Massachusetts, 
(1896).  Minnesota,   Maine  and  New  Hamp- 

102  Schaeffer  v.  Farmers',  etc.,  Ins.  shire. 
Co.,    80    Md.    563,    45    Am.    St.    361 
(1895). 

16 — ELLIOTT  INS. 


§    257  THE    STANDARD   POLICY.  242 

binding  upon  the  insured.104  In  discussing  this  provision  it  was 
said:105  "The  nature  and  extent  of  the  interest  of  the  insured  are 
matters  which  are  largely  influential  with  underwriters  in  taking  or 
rejecting  risks  and  estimating  premiums,  and  for  that  reason  any  con- 
dition respecting  them  in  a  contract  is  material  and  must  be  con- 
strued so  as  to  effectuate  the  purposes  of  the  parties.  But  while  this 
must  be  done,  the  law  assumes  that  the  parties  understood  the  words 
they  have  used;  therefore,  unless  there  are  potential  reasons  to  the 
contrary,  they  are  bound  by  the  legitimate  and  usual  meaning  of  the 
phrases  they  employ.  Now  it  must  be  observed  that  it  is  not  title, 
but  interest,  that  is  spoken  of  in  the  clause.  Title  and  interest  are  en- 
tirely different  things.  It  was  undoubtedly  competent  for  the  parties 
to  have  contracted  as  to  title,  *  *  *  but  in  this  case  they  have 
chosen  to  limit  the  provision  to  a  condition  of  the  interest,  either  legal 
or  equitable.  The  question  presented,  therefore,  to  us  now  is,  Was  the 
'interest/  legal  or  equitable,  of  D,  'unconditional  and  sole  ?'  As  to  the 
meaning  of  these  words,  when  used  in  the  present  connection,  there 
seems  to  be  a  concurrence  of  authority.  To  be  'unconditional  and 
sole'  the  interest  must  be  completely  vested  in  the  assured,  not  con- 
tingent or  conditional,  nor  for  life  or  years  only,  nor  in  common, 
but  of  such  a  nature  that  the  insured  must  stand  the  entire  loss  if 
the  property  is  destroyed,  and  this  is  so  whether  the  title  was  legal 
or  equitable/'  This  provision  of  the  policy  does  not  necessarily  dis- 
tinguish between  the  legal  and  equitable  title.  If  the  title  is  con- 
ditional or  contingent,  if  it  is  for  years  only  or  for  life,  or  in  com- 
mon, it  is  not  an  entire,  unconditional  and  sole  ownership;  but  the 
interest  is  the  same  as  it  affects  the  contract  of  insurance,  whether 
the  title  of  the  insured  be  legal  or  equitable.  "The  purpose  of  this 
provision  is  to  prevent  a  party  who  holds  an  undivided  or  contingent, 
but  insurable,  interest  in  property  from  appropriating  to  his  own 
use  the  proceeds  of  a  policy  taken  upon  the  valuation  of  the  entire 
and  unconditional  title  as  if  he  were  the  sole  owner,  and  to  remove 
from  him  the  temptation  to  perpetrate  fraud  or  crime.  For  without 
this,  a  person  might  be  able  to  exceed  the  measure  of  an  actual  in- 

104  Barnard  v.  National,  etc.,  Ins.  Dougherty,  102  Pa.  St.  568  (1883); 

Co.,  27  Mo.  App.  26  (1887).  Dupreau  v.  Hibernia  Ins.  Co.,  76 

1011  Hartford  F.  Ins.  Co.  v.  Keating,  Mich.  615  (1889);  JEtna  F.  Ins.  Co. 

86  Md.  130  (1897);  Imperial  F.  Ins.  v.  Tyler,  16  Wend.  (N.  Y.)  396 

Co.  v.  Dunham,  117  Pa.  St.  460,  2  (1836);  Oshkosh,  etc.,  Co.  v.  Ger- 

Am.  St.  686,  Woodruff  Ins.  Gas.  153  mania  F.  Ins.  Co.,  71  Wis.  454,  5 

(1888);  Pennsylvania  F.  Ins.  Co.  v.  Am.  St.  233  (1888). 


243  INTEREST CARE  OF  PROPERTY.  §  257 

demnity.  But  where  the  entire  loss,  if  the  property  is  destroyed  by 
fire,  must  fall  upon  the  party  insured,  the  reason  and  purpose  of 
this  provision  does  not  seem  to  exist,  and  in  the  absence  of  any  par- 
ticular inquiry  as  to  the  specific  nature  of  the  title  or  of  any  express 
stipulation  in  the  policy  that  the  insured  held  the  legal  or  equitable 
title,  either  being  available  to  secure  the  entire,  unconditional  and  sole 
ownership,  the  provision  referred  to  can,  we  think,  have  no  force  to 
defeat  the  plaintiff's  recovery  in  this  case."106  It  is  enough  if  the 
insured  be  the  substantial  equitable  owner  of  the  property  insured.107 

Where  the  reason  for  such  a  general  condition  in  a  printed  form 
of  a  policy  of  insurance  does  not  exist  in  a  particular  case,  the  con- 
dition itself  becomes  meaningless  and  inoperative.  Hence,  where 
a  form  of  policy  is  used  by  the  company  for  a  particular  kind  of  prop- 
erty peculiarly  situated,  and  the  policy  contains  conditions  which  are 
inapplicable  to  the  subject-matter  of  the  insurance,  the  conditions 
will  be  ignored  in .  construing  the  contract.  Thus,  a  person  owned 
individually  and  in  common  with  others  a  certain  number  of  barrels 
of  petroleum,  which  had  been  placed  for  transportation  and  storage 
in  a  certain  pipe  line.  To  protect  himself  from  loss  in  case  of  fire,  he 
took  out  a  policy  of  insurance  for  a  fixed  sum  on  the  petroleum  "his 
own  or  held  by  him  in  trust  for  others;"  and  a  condition  in  the  pol- 
icy provided  that  "if  the  insured  is  not  the  absolute  and  uncondi- 
tional owner  of  the  property  insured,  then  this  policy  to  be  void." 
It  was  held  that  the  condition  was  not,  under  the  circumstances, 
applicable,  and  that  the  company  was  liable  to  the  extent  of  the  policy 
upon  all  the  oil  destroyed  in  which  the  insured  had  any  interest  what- 
ever, but  not  for  the  loss  of  oil  in  which  he  had  no  interest  and 
which  the  owners  had  in  writing  requested  him  to  insure  before  the 
issuing  of  the  policy.108 

This  provision  must  not  be  construed  in  a  technical  sense.  It  mere- 
ly requires  that  the  insured  shall  be  the  actual  and  substantial  owner. 
Where  the  interest  of  the  insured  was  acquired  by  devise  "to  be  his 
forever  for  his  own  proper  use,  subject  only  to  restriction  and  aliena- 
tion until  he  attains  a  certain  age,  having  yet  thirteen  years  to  run," 
it  was  held  that  he  was  the  owner  of  the  property  within  the  meaning 
of  the  policy.109 

108  Imperial  F.  Ins.  Co.  v.  Dunham,  State  Ins.  Co.,  44  N.  J.  L.  485,  43  Am. 
117  Pa.  St.  460  (1888).  Rep.  397  (1882). 

107  Lebanon,  etc.,  Ins.  Co.  v.  Erb,  1U8  Grandin  v.  Rochester,  etc.,  Ins. 
112  Pa.  St.  149  (1886);  Martin  v.  Co.,  107  Pa.  St.  26  (1884). 

109  Yost  v.  McKee,  179  Pa.  St.  381, 


§    258  THE    STANDARD    POLICY.  244 

There  is  some  conflict  of  authority  on  the  question  of  the  binding 
effect  of  provisions  of  this  character  in  a  policy  issued  without  a 
written  application.  The  weight  of  authority  doubtless  supports 
the  view  that  the  insured,  by  accepting  the  policy,  is  charged  with 
knowledge  of  its  contents.  Thus,  it  was  held  in  Missouri  that  the 
acceptance  of  a  policy  which  contained  this  provision,  although  is- 
sued on  an  oral  application  which  made  no  statement  as  to  title, 
amounts  to  a  declaration  that  the  title  is  absolute,110  while  in  Michi- 
gan this  is  not  regarded  as  conclusive  upon  the  insured.111  Where 
there  are  no  special  provisions  in  the  policy  requiring  an  exact  dis- 
closure of  the  entire  quantity  and  quality  of  title,  it  is  sufficient  to 
describe  it  in  general  terms.  Thus,  where  the  true  title  was  called 
for,  it  was  held  sufficient  where  the  property  was  described  as  "his" 
and  unincumbered,  although  it  appeared  that  two  mortgages  had  been 
given  upon  the  property  by  previous  owners,  and  the  former  owner's 
equity  of  redemption  had  been  sold  on  execution  to  another  person 
before  the  plaintiff  acquired  his  title.  But  as  the  plaintiff  at  the 
time  of  the  insurance  had  the  right  to  redeem  the  equity  of  redemp- 
tion and  then  to  remove  the  other  incumbrances  and  thus  make  his 
title  absolute,  there  was  no  misrepresentation  of  title.  "The  assured 
had  an  estate  in  the  land  subject  to  mortgages  and  sales  on  execution, 
deeply  incumbered  but  still  redeemable,  and  therefore  he  had  an 
estate  to  which  the  lien  of  the  company  would  attach,  and  that  such 
an  interest  is  insurable  is  well  settled  by  many  cases."112 

§  258.  Incumbrances. — A  condition  in  a  policy  that  it  shall  be 
void  in  case  the  interest  of  the  insured  be  other  than  sole  and  uncon- 
ditional ownership  refers  to  the  quality  of  the  estate  or  interest,  and 
is  not  broken  by  incumbrances  existing  on  the  property  when  the 
insurance  is  effected.113  The  insured  is  therefore  under  no  obliga- 
tion to  disclose  the  fact  that  there  are  mortgages  or  other  incum- 
brances upon  the  property  unless  it  is  required  by  some  other  pro- 
vision of  the  policy.114  A  vendor's  lien  for  part  of  the  purchase- 

57  Am.  St.  604    (1897);   Barnard  v.  112  Buffum   v.    Bowditch,  etc.,   Ins. 

National  F.  Ins.  Co.,  27  Mo.  App.  26  Co.,  10  Cush.  (Mass.)  540  (1852). 

(1887).  ""Morotock  Ins.  Co.  v.  Rodefer,  92 

""Overton  v.  American,  etc.,  Ins.  Va.  747,  53  Am.  St.  846  (1896);  Cap- 
Co.,  79  Mo.  App.  1  (1898).  lis  v.  American  F.  Ins.  Co.,  60  Minn. 

mMiotke  v.  Milwaukee,  etc.,  Ins.  376,  51  Am.  St.  535  (1895). 

Co.,   113    Mich.    166,    71    N.    W.    463  m  Dolliver  v.  St.  Joseph,  etc.,  Ins. 

'  (1897).  Co.,  128  Mass.  315,  35  Am.  Rep.  378 


245 


INTEREST — CARE  OF  PROPERTY. 


258 


money  of  land  is  not  inconsistent  with  the  entire  unconditional  and 
sole  ownership  within  the  meaning  of  the  provision  avoiding  the  in- 


(1880);  Judge  v.  Connecticut  F.  Ins. 
Co.,  132  Mass.  521  (1882);  Clay,  etc., 
Ins.  Co.  v.  Beck,  43  Md.  358  (1875); 
Ellis  v.  Ins.  Co.,  32  Fed.  646  (1887); 
Bowditch,  etc.,  Ins.  Co.  v.  Winslow, 
3  Gray  (Mass.)  415  (1855).  Policies 
often  contain  provisions  requiring 
the  insured  to  disclose  existing  in- 
cumbrances.  In  Seal  v.  Farmers', 
etc.,  Ins.  Co.,  59  Neb.  253,  80  N.  W. 
807  (1899),  it  was  held  that  a  mis- 
representation as  to  the  amount  of 
the  incumbrance  upon  the  property 
insured,  where  the  policy  is  condi- 
tioned that  it  will  be  void  if  the  prop- 
erty be  mortgaged  or  otherwise  in- 
cumbered  without  notice  to  and  con- 
sent of  the  company  indorsed  there- 
on, will,  in  the  absence  of  a  waiver, 
avoid  the  policy.  The  fact  that  such 
mortgage  was  paid  before  the  loss 
occurred,  does  not  alter  the  legal  ef- 
fect of  a  breach  of  the  requirement: 
Insurance  Co.  v.  Wicker  (Tex.),  54 
S.  W.  300;  affirmed  93  Tex.  390,  55 
S.  W.  740  (1900).  In  Collins  v.  Mer- 
chants', etc.,  Ins.  Co.,  95  Iowa  540,  58 
Am.  St.  438  (1895),  it  was  held  that 
the  provision  that  the  policy  should 
be  void  if  the  property  be  in  any 
manner  incumbered,  "and  such  fact 
be  not  stated  in  this  policy  or  the 
insured's  application  for  insur- 
ance," is  a  stipulation  against  an 
incumbrance  existing  when  the  con- 
tract is  made  and  not  against  fu- 
ture incumbrances.  The  court  said: 
"If  the  statement  was  that  it  should 
be  void  if  the  property  be  in  any 
manner  incumbered  or  in  litigation, 
there  is  no  doubt  it  should  be  con- 
strued as  covering  future  as  well 
as  existing  incumbrances:  Mallory 
v.  Farmers'  Ins.  Co.,  65  Iowa  450; 
but  the  policy  contains  more  than 


this.  It  says  it  shall  be  void  under 
these  circumstances  unless  the  fact 
is  stated  in  this  policy  or  in  the  in- 
sured's application  for  insurance. 
*  *  *  Manifestly  this  is  an 
existing  or  present  one  and  not  one 
created  in  the  future.  The  words 
used  are  certainly  open  to  this  con- 
struction, and  if  so,  we  should  adopt 
that  most  favorable  to  the  insured 
under  all  the  established  tenets." 
In  Insurance  Co.  v.  Saindon,  53  Kan. 
623,  36  Pac.  983  (1894),  it  was  held 
that  where  the  insurance  policy 
provides  against  future  incum- 
brances, the  policy  will  be  avoided 
if  a  subsequent  incumbrance  is  cre- 
ated, or  if  an  incumbrance  existing 
at  the  time  of  the  application  for  in- 
surance be  materially  increased  by 
a  new  or  additional  debt.  But  the 
mere  subsequent  renewal  of  a  prior 
lien  or  mortgage  with  the  accrued 
interest,  is  not  an  increase  of  such 
pre-existing  indebtedness  or  the  cre- 
ation of  a  new  or  additional  incum- 
brance. In  Koshland  v.  Home,  etc., 
Ins.  Co.,  31  Ore.  321,  49  Pac.  864,  50 
Pac.  567  (1897),  it  appeared  that  the 
policy  was  issued  with  the  knowl- 
edge that  there  was  an  incumbrance 
upon  the  property.  The  policy  con- 
tained a  clause  rendering  it  invalid 
if  the  property  should  be  incum- 
bered in  the  future  without  the 
knowledge  and  consent  of  the  com- 
pany, and  it  was  held  that  the  pro- 
vision was  not  invalidated  by  the 
making  of  a  new  mortgage  for  the 
purpose  of  discharging  the  old.  In 
Cagle  v.  Chillicothe,  etc.,  Ins.  Co.,  78 
Mo.  App.  215  (1899),  where  the  pol- 
icy contained  a  stipulation  that 
"any  incumbrance  shall  avoid  the 
policy  unless  the  written  consent  of 


§  259 


THE    STANDARD   POLICY. 


246 


surance  if  the  interest  of  the  insured  be  other  than  such  sole  owner- 
ship.115 A  lease  of  the  premises  is  not  an  incumbrance  within  the 
meaning  of  a  condition  rendering  the  policy  void  if  the  property  is 
incumbered  by  a  future  mortgage  or  lien.116 

§  259.  Illustrations. — As  already  noted,  there  is  a  distinction  be- 
tween the  words  title  and  interest  as  used  in  insurance  policies.  Thus, 
a  provision  that  a  policy  shall  be  void  if  the  interest  of  the  insured 


the  company  is  obtained,"  and  the 
application,  which  was  a  part  of  the 
contract,  did  not  mention  certain 
unsatisfied  mortgages,  it  was  held 
that  the  policy  was  void,  although 
the  local  agent  knew  of  the  exist- 
ence of  the  mortgages;  since  the  sec- 
retary alone  could  consent  to  the  in- 
cumbrances.  But  in  Seal  v.  Farm- 
ers', etc.,  Ins.  Co.,  59  Neb.  253,  80 
N.  W.  807  (1899),  it  was  held  that 
where  the  application  was  oral  and 
no  inquiry  was  made  as  to  the  char- 
acter and  condition  of  the  title,  a 
failure  to  disclose  the  existence  of 
incumbrances  would  not,  in  the  ab- 
sence of  fraud,  avoid  the  policy. 
In  Flournoy  v.  Traders'  Ins.  Co.,  80 
Mo.  App.  655  (1899),  the  agent  is- 
sued the  policy  knowing  of  the  in- 
cumbrances on  the  property,  and  it 
was  held  that  the  company  thereby 
waived  the  stipulation  against  such 
incumbrance,  notwithstanding  the 
further  stipulation  that  such  agent 
was  not  authorized  to  waive,  as 
such  stipulation  applied  only  to  acts 
subsequent  to  the  issuing  of  the  pol- 
icy and  not  to  those  preceding  it. 
In  Arthur  v.  Palatine  Ins.  Co.,  35 
Ore.  27,  57  Pac.  62  (1899),  it  was 
held  that  where  the  policy  was  is- 
sued on  an  oral  application  and  no 
inquiry  was  made  as  to  incum- 
brances, and  representations  were 
made  with  reference  thereto,  and 
the  insured  did  not  know  that 


if  a  mortgage  existed  the  com- 
pany would  not  take  the  risk,  or 
that  the  policy  contained  a  pro- 
vision making  it  void  if  there  were 
existing  incumbrances,  the  insurer 
was  held  to  assume  the  risk  of  in- 
cumbrances. In  Insurance  Co.  v. 
Wicker,  93  Tex.  390,  54  S.  W.  30,  55  S. 
W.  74  (1900),  it  was  held  that  a  fail- 
ure to  give  notice  of  the  existence  of 
a  mortgage  on  the  property  insured 
when  required  by  the  terms  of  the 
policy  is  not  waived  by  the  insurer's 
knowledge  of  a  mortgage  subse- 
quently given  on  the  property  to 
secure  money  with  which  to  pay  a 
mortgage  existing  at  the  time  the 
policy  was  issued.  See,  also,  Mc- 
Kibban  v.  Des  Moines  Ins.  Co. 
(Iowa),  86  N.  W.  38  (1901).  In 
Parker  v.  Otsego,  etc.,  Ins.  Co.,  47 
App.  Div.  (N.  Y.)  204  (1900),  it  ap- 
peared that  the  application  was 
made  upon  a  printed  form  furnished 
by  the  company,  and  that  the  para- 
graph reading,  "The  aforesaid  prem- 
ises are  not  incumbered  by  mort- 
gage or  otherwise  to  exceed  the  sum 

of  $ ,"  was  not  completed  by  the 

applicant's  filling  out  the  blank,  and 
it  was  held  neither  an  assent  nor 
dissent  to  the  fact  of  the  existence 
of  a  mortgage. 

115  Boulden  v.  Phoenix  Ins.  Co.,  112 
Ala.  422,  20  So.  587  (1895). 

119  Read  v.  State  Ins.  Co.,  103  Iowa 
307,  64  Am.  St.  181  (1897). 


247  INTEREST CARE  OF  PROPERTY.  §  259 

is  not  an  entire,  unconditional  and  sole  ownership  of  the  property 
means,  where  the  interest  of  a  mortgagee  is  insured,  that  the  interest 
insured,  namely,  the  mortgage  lien,  is  an  unconditional  interest  be- 
longing to  the  mortgagee,  and  not  a  conditional  or  speculative  one.117 
A  person  in  whom  the  entire  legal  title  is  vested  is  the  sole  and  un- 
conditional owner  within  the  meaning  of  the  policy,  although  he  has 
made  a  lease  or  bill  of  sale  of  the  property,  reserving  title  until  the 
consideration  is  fully  paid.118  A  person  who  owns  the  fee  of  prop- 
erty subject  to  a  mortgage  and  lease  for  a  term  of  years  has  the  en- 
tire, unconditional  and  sole  ownership  of  the  property.119  It  is  well 
settled  that  an  outstanding  lease  does  not  affect  the  matter  of  owner- 
ship within  this  provision.120 

Where  no  written  application  was  made  and  no  questions  were 
asked  concerning  the  title,  it  was  held  that  the  insurance  was  valid, 
although  the  policy  contained  a  condition  declaring  it  to  be  void  if 
the  interest  of  the  insured  was  other  than  unconditional  and  sole 
ownership,  although  it  appeared  that  he  did  not  own  the  legal  title 
and  had  merely  purchased  the  property  and  paid  therefor  without 
having  received  a  conveyance.121  A  vendee  in  possession  without  a 
deed,  with  an  equitable  right  to  the  entire,  unincumbered  title  is 
the  owner  of  the  property.122  So,  the  owner  of  an  estate  in  fee  on  a 
condition  subsequent,  who  is  in  possession  with  no  conditions  broken, 
is  the  sole  and  unconditional  owner  of  the  property.123  One  who 
has  received  a  deed  from  a  married  man  in  which  his  wife  has  not 
joined  is  the  owner  of  the  property;  as  the  wife  has  no  claim  on  the 
realty  before  the  death  of  the  husband.124  Where  the  plaintiff  paid  a 
portion  of  the  purchase-price  and  took  possession  of  certain  personal 
property  under  an  agreement  that  after  a  certain  time  he  would  either 
pay  the  balance  or  resell  or  convey  the  property  to  the  vendor,  it  was 
held  that  he  took  an  absolute  title,  and  in  case  of  fire  was  entitled 
to  collect  the  insurance  on  a  policy  conditioned  that  it  was  void  if 

117  Hanover  F.  Ins.  Co.  v.  Bonn,  48  12U  Insurance  Co.  v.  Haven,  95  U.  S. 
Neb.  743,  58  Am.  St.  719  (1896).  242  (1877). 

118  Burson  v.   Fire  Ass'n,   136   Pa.  121  Dooly  v.  Hanover  F.  Ins.  Co.,  16 
St.    267,    20   Am.    St.    919   and   note  Wash.  155,  58  Am.  St.  26  (1896). 
(1890);   Johannes  v.  Standard  Fire  I22  Bonham  v.  Iowa,  etc.,  Ins.  Co., 
Office,  70  Wis.  196,  5  Am.  St.  159  and  25  Iowa  328  (1868). 

note  (1887).  m  Davis  v.  Pioneer  Furniture  Co., 

""Dolliver  v.  St.  Joseph,  etc.,  Ins.     102  Wis.  394  (1899). 

Co.,  128  Mass.  315,  35  Am.  Rep.  378  124  Ohio,  etc.,  Ins.  Co.  v.  Bevis,  18 
(1880).  Ind.  App.  17,  46  N.  E.  928  (1897). 


§    259  THE    STANDARD   POLICY.  248 

the  interest  of  the  insured  was  other  than  sole  and  unconditional.125 
The  fact  that  the  property  was  conveyed  to  the  insured  without  con- 
sideration for  the  purpose  of  placing  it  beyond  the  reach  of  the 
grantor's  creditors  is  not  a  defense  under  this  provision.126  A  mar- 
ried man  has  such  an  interest  in  the  household  furniture  owned  by 
his  wife  before  marriage  as  constitutes  him  its  sole  and  unconditional 
owner.127  The  fact  that  the  legal  title  to  the  property  was  in  an- 
other will  not  defeat  a  recovery  where  the  insured  was  the  beneficial 
owner  at  the  time  the  policy  was  issued.128  A  married  woman  is  the 
owner  of  her  property,  although  her  husband  has  a  homestead  in- 
terest therein.129  So,  the  owner  of  a  farm  is  the  sole  and  uncondi- 
tional owner  of  hay  produced  on  the  farm,  where  the  hay  is  pro- 
duced at  his  expense,  and  he  owns  two-thirds  of  it  absolutely,  and 
under  a  contract  with  a  laborer  is  to  credit  him  with  the  proceeds 
of  the  other  one-third  and  charge  him  with  the  cost  of  production.130 
Where  the  property  was  insured  in  the  name  of  a  firm  of  which  the 
insured  was  a  member,  but  which  had  been  dissolved  before  the  is- 
suance of  the  policy,  it  was  held  that  the  policy  was  valid  although  it 
contained  the  pondition  under  consideration.131 

The  words  "as  his  interest  may  appear"  in  a  policy  indicate  un- 
certainty not  only  as  to  the  extent,  but  as  to  the  quality  and  character 
of  the  interest ;  and  where  it  appeared  that  the  insured,  although  not 
the  owner,  had  an  insurable  interest,  it  was  held  that  there  was  no 
breach  of  condition  in  the  policy  forfeiting  it  in  case  the  interest 
of  the  insured  is  not  truly  stated  in  the  policy,  or  if  the  interest  is 
less  than  an  absolute  ownership.132  A  condition  in  a  policy  issued 
to  a  husband  and  wife  that  it  shall  be  void  if  the  subject  of  the  in- 
surance is  a  building  on  ground  not  owned  by  the  insured  in  fee- 
simple  is  not  broken  by  the  fact  that  the  fee-simple  of  the  land  is  in 
the  wife  alone,  as  there  must  be  an  ownership  in  some  other  person 

mStowell  v.  Clark,  47  App.  Div.  12a  Sun  Ins.  Office  v.  Beneke  (Tex. 

(N.  Y.)  626  (1900).  Civ.  App.),  53  S.  W.  98  (1899). 

126  Rochester  Loan,  etc.,  Co.  v.  Lib-  rM  Manchester  F.  Assur.  Co.  v. 

erty  Ins.  Co.,  44  Neb.  537,  48  Am.  St.  Abrams,  89  Fed.  932,  32  C.  C.  A.  426 

745  and  note  (1895).  (1898). 

1ZT  Georgia  Home  Ins.  Co.  v.  Brady  m  Delaware  Ins.  Co.  v.  Bonnet,  20 

(Tex.  Civ.  App.),  41  S.  W.  513  Tex.  Civ.  App.  107,  48  S.  W.  1104 

(1897).  (1898). 

128  McCoy  v.  Iowa,  etc.,  Ins.  Co.,  132  Dakin  v.  Liverpool,  etc.,  Ins. 

107  Iowa  80,  77  N.  W.  529  (1898).  Co.,  77  N.  Y.  600  (1879). 


249  INTEREST — CAKE  OF  PROPERTY.  §  260 

than  the  insured  to  violate  the  condition.133  A  policy  declared  that 
the  application  was  a  part  of  the  contract  of  insurance  and  was  made 
subject  to  the  rules  pf  the  company,  which  provided  that  the  policy 
should  be  void  if  the  application  should  not  contain  a  full,  fair,  sub- 
stantial and  true  representation  of  all  the  facts  and  circumstances 
respecting  the  property  so  far  as  within  the  knowledge  of  the  insured 
and  material  to  the  risk.  The  applicant  stated  that  she  was  the 
owner  of  the  land  upon  which  the  building  stood,  and  it  appeared 
that  she  was  a  widow,  and  that  her  only  title  was  a  life  estate  under 
the  will  of  her  husband,  which  contained  no  disposition  of  the  re- 
mainder. Her  husband  left  two  children  not  named  in  the  will,  and 
they  had  not  during  the  twelve  years  that  had  elapsed  since  the  pro- 
bate of  the  will,  of  which  six  had  passed  before  the  application  for 
the  insurance  was  made,  claimed  the  share  to  which  they  would  have 
been  entitled  if  he  had  died  intestate.  It  was  held  that  the  answer 
was  a  sufficient  description  of  her  interest.134 

§  260.  Illustrations  of  breach  of  condition. — One  who  owns  an  un- 
divided one-half  of  the  insured  property  has  not  the  entire,  uncon- 
ditional and  sole  ownership.135  Nor  has  one  who  has  purchased 
property  on  the  installment  plan,  the  title  remaining  in  the  vendor.136 
Where  the  insured  states  in  his  application  that  he  is  the  sole  owner 
of  the  property,  and  it  is  stipulated  that  if  his  answer  is  untrue,  or 
his  interest  other  than  a  perfect  legal  and  equitable  ownership,  the 
policy  shall  be  void,  there  is  a  breach  of  condition  where  the  property 
is  owned  by  his  wife.137  The  holder  of  a  quitclaim  deed  from  a 
second  mortgagee  is  not  the  unconditional  and  sole  owner  of  the 
property,138  nor  is  a  vendor  after  the  vendee  has  gone  into  posses- 
sion and  paid  the  purchase-price;139  nor  is  a  surviving  partner  the 
sole  owner  of  property  belonging  to  the  undivided  partnership  es- 
tate.140 A  partnership  does  not,  within  the  meaning  of  this  pro- 

13a  Mascott  v.   First   Nat'l   F.   Ins.  m  Planters'  Mut.  Ins.  Co.  v.  Loyd, 

Co.,  69  Vt.  116,  37  Atl.  255  (1896).  67  Ark.  584,  77  Am.  St.  136  (1900); 

134  Allen  v.  Charlestown,  etc.,  Ins.  Trott  v.  Woolwich,  etc.,  Ins.  Co.,  83 
Co.,  5  Gray  (Mass.)  384  (1855).  Me.  362,  22  Atl.  245  (1891). 

135  Sisk   v.    Citizens'    Ins.    Co.,    16  13S  Southwick  v.  Atlantic,  etc.,  Ins. 
Ind.  App.  565,  45  N.  E.  804  (1897).  Co.,  133  Mass.  457  (1882). 

136  Dumas    v.    Northwestern,    etc.,  139  Clay,  etc.,  Ins.  Co.  v.  Huron,  etc., 
Ins.  Co.,  12  App.  Cas.  (D.  C.)  245,  40  Co.,  31  Mich.  346  (1875). 

L.  R.  A.  358  (1898);  Geiss  v.  Frank-  14°  Crescent  Ins.  Co.  v.  Camp,  64 
lin  Ins.  Co.,  123  Ind.  172  (1889).  Tex.  521  (1885). 


§    260  THE    STANDARD   POLICY.  250 

vision,  own  property  contributed  as  a  partner's  share  of  the  capital, 
but  which  has  not  been  deeded  to  the  partnership.141  This  condition 
is  broken  where  the  insured  is  the  owner  only  of  an  undivided  one- 
half  interest  in  the  property,  although  at  the  time  the  insurance  was 
issued  he  thought  he  was  the  sole  owner  by  virtue  of  an  executory 
contract  of  the  other  owners  to  convey  to  him.142  A  person  who  has 
purchased  property  at  a  judicial  sale,  but  whose  bid  has  not  been 
ratified,  or  the  sale  confirmed  by  the  court,  has  not  an  unconditional 
and  sole  ownership  of  the  property.  In  one  case  the  court 
said:143  "We  have  been  referred  to  cases  where  it  is  held  that 
when  the  insured  is  in  possession  under  a  contract  of  purchase,  and 
the  legal  title  has  not  passed  by  conveyance,  the  ownership  is  not  un- 
conditional until  the  purchase-money  has  been  wholly  paid;144  but  it 
may  be  doubted  whether  such  cases  are  in  line  with  the  current  of 
authority/'  Where  the  insured  had  received  a  deed  of  the  property, 
upon  which  there  was  a  mortgage,  from  her  son,  but  failed  to  record 
it,  and  the_  mortgage  had  been  foreclosed  and  the  property  sold,  and 
she  was  not  made  a  party  to  the  foreclosure  suit,  and  failed  to  re- 
deem from  the  sale  under  the  judgment  within  the  time  allowed  by 
statute,  it  was  held  that  she  was  not  the  sole  and  unconditional  owner 
of  the  property  within  the  meaning  of  the  policy.145  So,  one  who 
has  given  his  bond  for  a  debt  secured  by  a  mortgage  on  the  premises, 
and  is  the  holder  of  another  mortgage,  is  not  the  sole  and  uncon- 
ditional owner  of  the  property.146  A  person  who  owns  all  the  stock 
of  a  corporation  is  not  the  owner  of  the  property  of  the  corporation 
within  the  meaning  of  this  provision.147  A  tenant  for  life  can  not 
recover  on  a  policy  which  provides  that  there  shall  be  no  liability 
"if  the  interest  of  the  assured  is  not  one  of  absolute  and  sole  owner- 
ship."148 A  policy  of  insurance  issued  to  one  whose  only  interest  in 
the  property  is  by  virtue  of  a  land  contract  which  he  holds  as  col- 

141  Citizens'    F.    Ins.,    etc.,    Co.    v.  Soc.,  124  Cal.  164,  56  Pac.  770  (1899). 
Doll,    35    Md.    89,    6    Am.    Rep.    360  14B  Ordway  v.  Chace,  57  N.  J.  Eq. 
(1871).  478,  42  Atl.  149  (1899). 

142  Liverpool,  etc.,  Ins.  Co.  v.  Coch-  147  Syndicate  Ins.  Co.  v.  Bonn,  65 
ran,  77  Miss.  348,  26  So.  932  (1899).  Fed.  165,  12  C.  C.  A.  531  (1894). 

143  Hartford  F.  Ins.  Co.  v.  Keating,  14S  Collins  v.  St.  Paul,  etc.,  Ins.  Co., 
86  Md.  130,  63  Am.  St.  499  (1897).  44  Minn.  440,  46  N.  W.  906    (1890). 

144  Farmers',  etc.,  Ins.  Co.  v.  Curry,  See,  also,  Davis  v.  Iowa  State  Ins. 
13  Bush  (Ky.)  312,  26  Am.  Rep.  194  Co.,    67    Iowa    494,    25    N.    W.    745 
(1877).  (1885);  Garver  v.  Hawkeye  Ins.  Co., 

145  Breedlove  v.  Norwich,  etc.,  Ins.  69  Iowa  202,  28  N.  W.  555    (1886). 


251 


INTEREST — CARE  OF  PROPERTY. 


261 


lateral  security  for  money  advanced  to  the  purchaser  is  void  in  its 
inception  where  it  provides  that  it  shall  be  void  unless  otherwise  pro- 
vided, if  the  interest  of  the  insured  be  other  than  unconditional  and 
sole  ownership,  or  if  the  subject  of  the  insurance  be  a  building  on 
ground  not  owned  by  the  insured  in  fee-simple,  although  the  recitals 
that  the  insured  held  the  property  under  a  land  contract  might 
protect  him  if  he  had  been  the  absolute  owner  of  the  contract.149 

This  provision,  like  all  others  inserted  for  its  benefit,  may  be  waived 
by  the  company,  and  it  is  generally  held  that  it  can  not  dispute  the 
validity  of  the  policy  on  the  ground  that  the  insured's  interest  in 
the  property  was  not  an  unconditional  and  sole  ownership  when  the 
limited  interest  was  fully  and  correctly  disclosed  to  the  agent  of  the 
company  when  the  policy  was  taken  out.150 

§  261.  Building  on  leased  ground. — "The  entire  policy,  unless 
otherwise  provided  by  agreement  indorsed  thereon,  is  void  if  the  sub- 
ject of  the  insurance  be  a  building  on  ground  not  owned  by  the  in- 
sured in  fee-simple/'151  This  provision  is  valid,  and  its  breach  will 
invalidate  the  policy.152  It  is  violated  where  the  applicant  is  the 


149  Gettelman  v.   Commercial,  etc., 
Assur.   Co.,   97   Wis.   237,   72   N.  W. 
627   (1897). 

150  Clapp    v.    Farmers',    etc.,    Ins. 
Ass'n,   126  N.  C.  388,  35   S.  E.   617 
(1900);    Westchester  F.  Ins.  Co.  v. 
Wagner   (Tex.  Civ.  App.),  57  S.  W. 
876  (1900);  London,  etc.,  Ins.  Co.  v. 
Gerteson,  21  Ky.  L.  471,  51  S.  W.  617 
(1899);    Teutonic,   etc.,   Ins.   Co.   v. 
Howell,  21  Ky.  L.  1245,  54  S.  W.  852 
(1900);  Porter  v.  Orient  Ins.  Co.,  72 
Conn.  519,  45  Atl.  7  (1900).    An  in- 
surer, which,  knowing  that  the  title 
of  the   insured  is   less  than   a   fee 
simple,    issues    a    policy    providing 
that  it  shall  be  void  if  the  title  of 
the  insured  is  less  than  a  fee-simple, 
unless  otherwise  provided  by  agree- 
ment indorsed  on  or  annexed  to  the 
policy,   thereby  waives   such   provi- 
sion, whether  or  not  it  intended  to 
do  so:      Schultz  v.  Caledonian  Ins. 
Co.,  94  Wis.  42,  68  N.  W.  414  (1896). 


151  This    clause    is    found    in    the 
standard  forms  in  use  in  New  York, 
New   Jersey,   North   Carolina,    Con- 
necticut,  Rhode   Island,   Wisconsin, 
Louisiana,  North  Dakota,  South  Da- 
kota, and  Michigan.    The  Iowa  form 
adds  the  words,  "and  the  title  be  not 
evidenced  by  deed."    It  is  not  found 
in    the    Massachusetts,    Minnesota, 
Maine  and   New   Hampshire   stand- 
ard forms. 

152  Dowd  v.  American  F.  Ins.  Co., 
41  Hun    (N.  Y.)   139,  Woodruff  Ins. 
Cas.  176   (1886);  Ben  Franklin  Ins. 
Co.  v.  Weary,  4  111.  App.  74   (1879). 
As   to   buildings   on   leased   ground 
generally,  see  Fletcher  v.  Common- 
wealth   Ins.    Co.,    18    Pick.    (Mass.) 
419  (1836);  Fowle  v.  Springfield,  etc., 
Ins.  Co.,  122  Mass.  191,  23  Am.  Rep. 
308  (1877);  Insurance  Co.  v.  Haven, 
5  Otto   (U.  S.)   242   (1877).     Such  a 
provision  is  a  warranty  and  can  not 
be  disregarded:     East  Texas  F.  Ins. 


§    262  THE    STANDARD    POLICY.  252 

owner  in  fee  of  only  an  undivided  interest  in  the  land.133  The  pos- 
session of  a  life  estate  in  real  estate  is  not  a  compliance  with  this 
provision.154  It  has  been  held  that  one  who  has  the  equitable  right 
to-  a  fee-simple  title  is  within  the  provision.153  Where  no  questions 
were  asked  and  no  representations  made,  it  was  held  that  one  who  had 
paid  the  full  purchase-price  for  the  property,  but  had  not  received 
his  deed,  was  the  owner  of  the  ground  in  fee-simple  within  the  mean- 
ing of  this  provision.136  So,  a  provision  avoiding  the  policy,  if  the 
subject  of  the  insurance  is  a  building  on  "ground  not  owned  by  the 
insured,"  is  not  broken  if  a  part  of  the  building  stands  on  ground 
not  owned  by  the  insured.157  The  provision  does  not  apply  where  the 
policy  is  issued  on  a  leasehold  interest.158  Where  the  company  knew 
that  the  building  was  on  leased  property  when  the  policy  was  issued, 
and  no  indorsement  showing  such  fact  was  made  on  the  policy,  it 
was  held  that  it  could  not  defeat  a  recovery  for  breach  of  this  condi- 
tion.159 The  condition  is  broken  where  the  deed  is  delivered  to  a  third 
person  to  hold  until  certain  conditions  are  performed.100 

§  262.  Incumbrance  by  chattel  mortgage. — The  policy  is  rendered 
void  if  a  chattel  mortgage  is  placed  upon  the  property  without  the 
consent  of  the  insurer.161  In  the  absence  of  this  provision  the  execu- 

Co.  v.  Brown,  82  Tex.  631,  18  S.  W.  1M  Dooly  v.  Hanover  *\  Ins.  Co.,  16 

713     (1891).       When     the     insured  Wash.  155,  47  Pac.  507  (1895). 

property  is  described  as  located  on  a  157  Haider  v.  St.  Paul,  etc.,  Ins.  Co., 

military  reservation  it  is  sufficient  67  Minn.  514,  70  N.  W.  805    (1897). 

notice  to  the  company  that  the  in-  15S  Philadelphia   Tool   Co.   v.   Brit- 

sured  does  not  own  the  title  in  fee;  ish,  etc.,  Assur.  Co.,  132  Pa.  St.  236, 

and    the    provision    is    inoperative:  19  Atl.  77  (1890). 

Broadwater  v.  Lion  F.  Ins.  Co.,  34  J59  Cowell  v.  Phoenix  Ins.  Co.,  126 

Minn.  465  (1886).  '  N.  C.  684,  36  S.  E.  184  (1900).     See, 

153  Scottish,  etc.,  Ins.  Co.  v.  Petty,  also,  Clawson  v.  Citizens',  etc.,  Ins. 

21  Fla.  399  (1885).  Co.,    121    Mich.    591,    80    N.    W.    573 

1M  Garver  v.  Hawkeye  Ins.  Co.,  69  (1899);  Berry  v.  American,  etc.,  Ins. 

Iowa  202  (1886).    But  see  Haden  v.  Co.,  132  N.  Y.  49  (1892). 

Farmers',    etc.,    Ass'n,    80    Va.    683  16°  Pangborn    v.    Continental    Ins. 

(1885).  Co.,  62  Mich.  638  (1886). 

155  Swift  v.  Vermont,  etc.,  Ins.  Co.,  m  This    clause    is    found    in    the 

18  Vt.  305   (1846);   Pennsylvania  F.  standard    forms    of    the    following 

Ins.  Co.  v.   Dougherty,  102  Pa.   St.  states:      New    Jersey,    Connecticut, 

568  (1883);  Elliott  v.  Ashland,  etc.,  Rhode  Island,  Wisconsin,  Louisiana, 

Ins.  Co.,  117  Pa.  St.  548,  12  Atl.  676  North  Dakota,  South  Dakota,   New 

(1888);    Lewis  v.   New  England   F.  York,  North  Carolina,  and  Michigan. 

Ins.  Co.,  29  Fed.  496  (1886).  The    Iowa    form    adds    the    words, 


253  INTEREST— CARE  OF  PROPERTY.  §  2G2 

tion  of  a  chattel  mortgage  is  not  a  violation  of  the  provision  relating 
to  an  increase  of  the  risk,  or  a  change  in  the  title,  interest  or  posses- 
sion of  the  property.162  But  there  are  some  authorities  to  the  con- 
trary. Thus,  it  was  held  that  a  chattel  mortgage  was  a  violation 
of  the  clause  relating  to  the  "alteration  of  the  ownership/'163  and  that 
it  was  an  "alienation  in  part."164  So,  in  Michigan  it  was  recently 
held  that  the  execution  of  a  chattel  mortgage  by  a  partner  on  the 
partnership  chattels  insured  for  the  benefit  of  the  firm,  is  such  a 
change  in  the  subject  of  the  insurance  as  will  render  the  policy  void.165 

This  provision  in  the  standard  policy  is  valid  and  binding,166  and 
the  same  is  true  of  one  which  provides  that  the  policy  shall  be  void 
if,  at  the  time  of  the  execution  of  the  policy,  the  property  is  covered 
by  a  chattel  mortgage.167 

Such  conditions  prohibiting  incumbrances  upon  insured  property 
are  legal,  reasonable  and  proper,  and  in  line  with  public  policy.  They 
apply,  however,  only  to  voluntary  liens  and  levies  and  not  to  invol- 
untary incumbrances,  such  as  tax  liens  and  payments  procured 
in  invitum.  It  is  said,  however,  that  a  violation  of  such  a  condition 
does  not  render  a  policy  absolutely  void,  but  merely  voidable  at  the 
election  of  the  insurer.168  The  provision  in  the  standard  policy  refers 
only  to  the  common,  ordinary  chattel  mortgage  and  instruments  of 
that  general'  nature,  use  and  purpose.  It  does  not,  therefore,  apply 
to  a  covenant  in  a  lease  which  provides  that  the  lessor  shall. have  a 
first  lien  on  all  the  buildings  for  any  unpaid  rents  or  taxes,  as  such 
a  covenant  is  not  a  chattel  mortgage  in  the  ordinary  sense  of  the 
term.169 

"judgment,  mechanic's  lien,  or  any  1W  Webster  v.  Dwelling  House  Ins. 

other  lien,  or  be  or  become  liable  in  Co.,  53  Ohio  St.  558,  30  L.  R.  A.  719 

any  way  to  any  lien-holder."     The  (1895);    Brown    v.    Westchester    F. 

clause  does  not  appear  in  the  stand-  Ins.   Co.,   9  Kan.  App.   526,   58   Pac. 

ard  forms  of  Massachusetts,  Minne-  276  (1899). 

sota,  Maine,  and  New  Hampshire.  16r  Crikelair  v.   Citizens'   Ins.   Co., 

102  Wytheville  Ins.  Co.  v.  Stultz,  87  168  111.  309,  61  Am.  St.  119    (1897). 

Va.  629  (1891).  See,  also,  Wilcox  v.  Continental  Ins. 

163Edmands  v.    Mutual,   etc.,    Ins.  Co.,  85  Wis.  193    (1893);   Wierengo 

Co.,  1  Allen  (Mass.)  311  (1861).  v.  American   F.   Ins.   Co.,   98   Mich. 

164 Abbott   v.    Hampden,    etc.,    Ins.  621   (1894). 

Co.,  30  Me.  414  (1849);  Judge  v.  Con-  1M  Dover  Glass  Works  Co.  v.  Amer- 

necticut  F.  Ins.  Co.,  132  Mass.  521  ican  F.  Ins.  Co.,  1  Marvel  (Del.)  32, 

(1882).  65  Am.  St.  264  (1895). 

165  Olney   v.   German   Ins.   Co.,   88  18°  Caplis  v.  American  F.  Ins.  Co., 

Mich.  94,   26  Am.  St.  281  and  note  60    Minn.    376,    51    Am.    Rep.    535 

(1891).  (1895). 


§    262  THE    STANDARD    POLICY.  254 

In  Nebraska  and  Iowa  the  cancellation  or  discharge  of  a  mortgage 
on  the  insured  chattels,  given  in  violation  of  this  condition  before  the 
loss  occurs,  revives  the  contract  from  the  date  of  the  cancellation  or 
discharge.170  But  in  Arkansas  such  an  incumbrance  avoids  the  con- 
tract, although  it  is  paid  before  the  loss  occurs.  The  court  said:171 
"The  language  of  the  clause,  in  its  plain,  ordinary  and  popular  sense, 
indicates  a  total  extinction  of  the  policy  if  the  property  be  incum- 
bered,  and  not  a  suspended  animation  thereof,  subject  to  be  revived 
upon  the  payment  of  the  mortgage  debt.  Courts,  by  interpretation, 
can  not  engraft  on  an  insurance  contract  any  more  than  on  any  other, 
a  meaning  foreign  to  that  which  the  plain  terms  employed  by  the 
parties  themselves  convey.  It  is  undoubtedly  true  that  where  the 
contract,  on  account  of  any  ambiguity  of  the  language  used,  is  reason- 
ably susceptible  of  different  constructions,  that  construction  should  be 
adopted  which  is  most  favorable  to  the  insured.  The  insurer  had 
the  right  to  contract  against  any  possible  risk  of  loss  or  embarrass- 
ment incident  to  incumbering  the  property  insured.  *  *  *  The 
clause  is  reasonable  and  clear  and  the  parties  had  the  right  to  so 
contract." 

A  policy  insuring  both  real  and  personal  property  provided  that 
if  "the  property  should  thereafter  become  mortgaged  or  incum- 
bered,"  the  policy  should  be  void,  and  also  declared  it  would  be  for- 
feited if  other  insurance  was  taken  out  on  any  of  such  property.  It 
was  held  that  since  the  provision  for  forfeiture  for  mortgaging  did 

170  Home  F.  Ins.  Co.  v.  Johansen,  not    be    settled    without    expensive 
59  Neb.  349,  80  N.  W.  1047   (1899);  litigation.     The  insured  mortgagor 
State  Ins.  Co.  v.   Schreck,   27  Neb.  might  enter  into  collusion  with  the 
527,  Woodruff  Ins.  Gas.  160  (1899);  mortgagee  to  defraud  the  insurance 
Born  v.  Home  Ins.  Co.,  110  Iowa  379,  company  after  the  loss  occurred  by 
81   N.   W.   676    (1900);    Kimball   v.  claiming  that  the  mortgage  had  been 
Monarch    Ins.    Co.,     70     Iowa    513  paid   off   and   discharged,    when   in 
(1886).  fact  it  had  not.     Unfortunately  all 

171  German,      etc.,      Ins.      Co.      v.  men  are  not  honest.    Without  some 
Humphrey,  62  Ark.  348,  54  Am.  St.  such  provision  in  the  policy,  the  un- 
297    (1896).     The   court  said:      "If  scrupulous  would  have  an  inviting 
it  be  said  that  where  the  mortgage  opportunity,  after  a  loss,  to  divide 
is  paid  off,  there  is  no  longer  an  in-  the  spoils,  at  the  expense  of  the  in- 
cumbrance   and    increase    of    risk,  surer.    Doubtless  some  such  consid- 
still,  as  to  whether  or  not  the  mort-  erations     as    these     prompted     the 
gage  had  been  paid  off  would  be  the  clause  in  the  policy  under  consider- 
question,  and  one  that  often  could  ation." 


255  INTEREST — CARE  OF  PROPERTY.  §  263 

not  provide  a  forfeiture  for  mortgaging  "any"  of  the  property,  but 
treated  "the  property"  as  a  whole,  the  policy  would  not  be  forfeited  by 
a  mortgage  given  on  part  of  the  property  only.172  A  statute  requir- 
ing every  insurer,  before  issuing  a  policy,  to  examine  the  building  or 
structure  .to  be  insured  and  fix  the  insurable  value  thereof,  and  provid- 
ing that  recovery  may  be  had  notwithstanding  any  subsequent  change 
not  affecting  the  risk,  applies  only  to  the  condition  of  the  building  and 
structure,  and  does  not  impair  or  affect  any  condition  in  the  policy 
against  the  making  of  any  subsequent  incumbrance  without  notice  to 
and  consent  of  the  company.173  Where  the  policy  provided  that  it 
should  become  void  "if  the  property  be  or  become  incumbered  by  a 
chattel  mortgage,"  and  no  written  application  was  made  and  no 
questions  asked  regarding  incumbrances,  it  was  held  that  the  condi- 
tion was  broken  by  the  existence  of  a  chattel  mortgage,  although  it 
was  of  record  at  the  time  the  policy  was  issued.  It  was  said  that  the 
great  weight  of  authority  is  to  the  effect  that  where  the  policy  con- 
tains such  a  stipulation,  and  the  property  at  the  time  of  the  execution 
of  the  policy  is  covered  by  a  mortgage,  no  recovery  can  be  had  unless 
it  appears  that  there  was  a  waiver  or  estoppel  by  which  the  company 
is  precluded  from  relying  on  the  contract.174 

A  mortgage  which  has  been  paid,  but  not  satisfied,  at  the  time 
the  policy  is  issued,  is  not  within  this  provision.175 

§  263.  Foreclosure  proceedings. — The  policy  is  void  if,  with  the 
knowledge  of  the  insured,  foreclosure  proceedings  are  commenced  or 
notice  given  of  the  sale  of  the  property  covered  by  the  policy  by  virtue 
of  any  mortgage  or  trust  deed.176  This  clause  is  peculiar  to  the  New 

172  Born  v.  Home  Ins.  Co.,  110  Iowa  Co.,  17  Pa.  St.  253   (1851);  Pennsyl- 
379,  81  N.  W.  676  (1900).  vania  Ins.  Co.  v.  Gottsman's  Admrs., 

173  Webster  v.  Dwelling  House  Ins.  48  Pa.  St.  151  (1864).    The  principle 
Co.,  53  Ohio  St.  558,  53  Am.  St.  658  upon  which  these  decisions  rest  was 
(1895).    See,  also,  Sun  Fire  Office  v.  recognized    and   applied   in   Reaper 
Clark,  53  Ohio  St.  414  (1895).  City  Ins.  Co.  v.  Brennan,  58  111.  158 

174Crikelair  v.   Citizens'   Ins.   Co.,  (1871),  and  Hebner  v.  Sun  Ins.  Co., 

168  111.  309,  48  N.  E.  167  (1897).    It  157  111.  144,  41  N.  E.  627  (1895). 

was  so  expressly  held  in  Wilcox  v.  175  Laird  v.   Littlefleld,   164   N.  Y. 

Continental   Ins.   Co.,   85   Wis.   193,  597,  58  N.  E.  1089  (1900). 

55  N.  W.  188    (1893);   Wierengo  v.  m  This    clause    is    found    'in    the 

American  F.  Ins.  Co.,  98  Mich.  621,  standard  policies  in  use  in  the  states 

57  N.  W.  833  (1894);  Fitchburg,  etc.,  of  New  Jersey,  Connecticut,  Rhode 

Bank  v.  Amazon  Ins.  Co.,  125  Mass.  Island,  Wisconsin,  Louisiana,  North 

431  (1878);  Smith  v.  Columbia  Ins.  Dakota,  New  York,  North  Carolina, 


§    263  THE    STANDARD   POLICY.  256 

York  form  and  would  seem  to  indicate  that  the  giving  of  a  mortgage 
need  not  be  communicated  to  the  insurer  until  foreclosure  proceedings 
are  commenced.177  As  said  in  New  York:178  "A  provision  that  a 
policy  shall  be  void  in  case  of  foreclosure  proceedings  is  common  in 
insurance  policies,  and  we  must  assume  that  experience  has  shown  to 
the  underwriters  that  such  proceedings  increase  the  risk  to  the  in- 
surer. The  defendant  might  have  been  willing  for  the  premium 
charged  to  insure  this  barn  with  the  mortgage  upon  it,  and  yet  not 
willing  to  insure  it  in  case  of  proceedings  to  foreclose  the  mortgage. 
It  did  assent  to  the  mortgage  and  agree  that  loss,  if  any,  should  be 
paid  to  the  mortgagee,  but  it  did  not  assent  to  continue  the  insurance 
in  case  the  risk  was  increased  by  proceedings  to  foreclose  the  mort- 
gage. Before  commencing  the  foreclosure  the  plaintiff  should  have 
obtained  the  assent  of  the  defendant.  It  might  have  examined  the 
circumstances  and  granted  such  assent  without  any  conditions,  or  it 
might  have  required  additional  premium  for  the  increased  risk.  It 
might  have  refused  altogether,  and  in  that  case  the  plaintiff  could 
have  delayed  his  foreclosure  until  the  end  of  the  year  or  surrendered 
the  policy  and  procured  insurance  elsewhere.  Even  if  the  provision 
were  found  to  be  very  inconvenient  and  embarrassing,  there  is  no 
help  for  it.  There  it  is,  and  we  can  not  take  it  out  of  the  policy  by 
construction." 

This  provision  relates  only  to  the  future,  and  therefore  the  policy 
is  not  rendered  void  by  the  fact  that  foreclosure  proceedings  are 
pending  when  the  policy  is  issued,  which  fact  was  not  disclosed  to  the 
insurer.179  If  a  policy  upon  mortgaged  property  expressly  provides 

South  Dakota,  and  Michigan.     The  Co.,  45  Conn.  430   (1878);   Shepherd 

Iowa  clause  is  as  follows:      "Or  if  v.  Union,  etc.,  Ins.  Co.,  38  N.  H.  232 

foreclosure     proceedings     be     com-  (1859);    Smith   v.    Monmouth,    etc., 

menced   or   a   suit  begun   in  which  Ins.  Co.,  50  Me.  96  (1863);  Byers  v. 

ownership,  title  or  possession  is  in-  Farmers'  Ins.  Co.,  35  Ohio  St.  606, 

volved  or  disputed,  or  notice  given  35  Am.  Rep.  623   (1880)].     But  see 

of  sale  of  any  property  covered  in  Western,  etc.,  Ins.  Co.  v.  Riker,  10 

whole   or   in   part   by   this   policy."  Mich.  279  (1862). 
The  clause  is  not  found  in  the  stand-        m  Titus  v.   Glens  Palls   Ins.   Co., 

ard  policies  of  Massachusetts,  Min-  81  N.  Y.  410,  Woodruff  Ins.  Cas.  176 

nesota,  Maine  or  New  Hampshire.  (1880);  Quinlan  v.  Providence,  etc., 

177  Richards    Ins.,     §     146     [citing  Ins.  Co.,  133  N.  Y.  356,  31  N.  E.  31 

Conover  v.  Mutual  Ins.  Co.,  1  Comst.  (1892). 

(N.  Y.)   290   (1848);   Judge  v.  Con-        m  Orient  Ins.  Co.  v.  Burrus  (Ky.), 

necticut  F.  Ins.  Co.,  132  Mass.  521  63  S.  W.  453  (1901). 
(1882);    Bishop    v.    Clay,    etc.,    Ins. 


257  INTEREST CAKE  OF  PKOPEETY.  §  263 

that  it  shall  become  absolutely  void  upon  the  commencing  of  proceed- 
ings for  foreclosure  of  the  mortgage  without  the  written  consent  of 
the  insurer,  and  the  mortgage  by  its  terms  is  subject  to  foreclosure 
if  the  taxes  upon  the  property  are  permitted  to  become  delinquent,  it 
is  invalidated  when  the  property  is  advertised  for  sale  on  account  of 
such  default.180  To  render  the  policy  void  for  violation  of  this  pro- 
vision it  is  not  necessary  to  restore  any  part  of  the  premium,  as  this 
is  to  be  done  only  when  the  policy  is  returned  for  cancellation.181 
Under  a  provision  in  the  policy  that  it  shall  be  void  unless  otherwise 
provided  by  agreement  thereon,  if,  with  the  knowledge  of  the  insured, 
proceedings  be  commenced  to  foreclose  a  mortgage  on  the  property, 
and  that  no  condition  of  the  policy  can  be  waived  except  by  writing 
thereon,  such  foreclosure,  without  an  indorsement  on  the  policy, 
avoids  it,  although  notice  of  the  foreclosure  is  given  to  the  agent 
who  issued  the  policy.182  Where  a  policy  insuring  a  mortgagee's  in- 
terest was  excepted  from  the  condition  that  it  should  be  void  if  fore- 
closure proceedings  should  be  commenced  against  the  property  with- 
out the  knowledge  of  the  mortgagee,  it  was  held  that  the  policy  was 
not  invalidated  as  to  him  by  the  foreclosure  of  a  judgment  lien  against 
the  property  by  a  third  party.183 

A  provision  to  the  effect  that  the  "entry  of  a  foreclosure  of  a  mort- 
gage should  be  deemed  an  alienation  of  the  property"  does  not  import 
a  complete  foreclosure.184  Where  the  policy  contained  a  provision 
that  it  should  be  void  "if,  with  the  insured' s  knowledge,  foreclosure 
proceedings  be  commenced  or  notice  of  sale  given  of  any  property 
covered  by  this  policy  by  virtue  of  any  mortgage,"  it  was  held  that 
where  the  mortgagors  and  another  party  gave  the  assignee  of  the  mort- 
gage a  personal  judgment  note  for  the  balance  due  on  the  mortgage,  a 
judgment  thereafter  entered  on  the  note  was  not  a  foreclosure  of  the 
mortgage  within  the  meaning  of  the  provision.185 

J8°  Springfield,  etc.,  Co.  v.  Traders'  m  Sun  Ins.  Office  v.  Beneke  (Tex. 

Ins.  Co.,  151  Mo.  90,  74  Am.  St.  521  Civ.  App.),  53  S.  W.  98  (1899). 

(1899).     See,  also,  Horton  v.  Home  m  Mclntire  v.  Norwich  F.  Ins.  Co., 

Ins.  Co.,  122  N.  C.  498,  65  Am.  St.  102  Mass.  230,  3  Am.  Rep.  458  (1869). 

724  and  note  (1898).  In  Pennsylvania  the  mere  issuance 

isi  Norris  v.  Hartford  F.  Ins.  Co.,  of  a  scire  facias  on  the  property  does 

55  S.  C.  450,  33  S.  E.  566  (1899).  not  invalidate  the  policy:     Weiss  v. 

182  Woodside    Brewing   Co.   v.    Pa-  American  F.  Ins.  Co.,  148  Pa.  St.  349, 

cine  F.  Ins.  Co.,  159  N.  Y.  549,  54  23  Atl.  991  (1892). 

N.  E.  1095  (1899).  185  Collins  v.  London  Assur.  Corp., 

165  Pa.  St.  298,  30  Atl.  924   (1895). 
17 — ELLIOTT  INS. 


§    264  THE    STANDARD   POLICY.  258 

An  illegal  foreclosure  sale  made  without  the  consent  of  the  insured 
will  not  cause  a  forfeiture  of  the  policy.186  Where  there  is  a  fore- 
closure sale,  and  the  order  of  confirmation  is  thereafter  set  aside  for 
irregularity,  the  interest  of  the  mortgagor  remains  and  is  protected 
by  the  policy.187 

§  264.  Generation  of  illuminating  gas. — "The  policy  is  rendered 
void  if  illuminating  gas  or  vapor  is  generated  in  or  adjacent  to  the 
insured  buildings  for  use  therein/'188  The  prohibition  is  upon  the 
generation  of  gas  or  vapor,  and  not  upon  its  use  for  lighting  the  build- 
ing. Where  the  policy  contained  a  clause  prohibiting,  unless  by 
special  agreement  indorsed  on  the  policy,  "the  generating  or  evaporat- 
ing within  the  building  or  contiguous  thereto  of  any  substance  for  a 
burning  gas  or  the  use  of  gasoline  for  lighting,"  and  the  plaintiffs 
constructed  works  fifty  feet  from  the  building  for  the  manufacture 
of  gas  from  gasoline  which  was  conducted  to  the  building  through 
pipes,  it  was  held  that  the  gas  works  were  not  contiguous  to  the  build- 
ing within  the  meaning  of  the  policy.189 

VIII.     Change  in  Interest,  Title  or  Possession. 

This  entire  policy  shall  be  void  *  *  *  if  any  change,  other 
than  by  the  death  of  an  insured,  take  place  in  the  interest,  title,  or 

188  Niagara  P.  Ins.  Co.  v.  Scammon,  iana,  North  Dakota,  South  Dakota, 

144  111.  490,  28  N.  E.  919,  32  N.  E.  Michigan,  North  Carolina,  Iowa,  and 

914,  19  L.  R.  A.  118    (1893);    Rich-  Wisconsin.     It  is  not  found  in  the 

land,  etc.,  Ins.  Co.  v.  Sampson,  38  standard  policies  of  Massachusetts, 

Ohio  St.   672    (1883);    Georgia,  etc.,  Minnesota,    Maine    or    New    Hamp- 

Ins.  Co.  v.  Kinnier,  28  Gratt.   (Va.)  shire. 
88  (1877).  189Arkell  v.  Commerce  Ins.  Co.,  69 

187Richland,  etc.,  Ins.  Co.  v.  Samp-  N.  Y.  191,  25  Am.  Rep.  168   (1877). 

son,  38  Ohio  St.  672  (1883).     In  this  A   condition   in   a   policy   of   insur- 

case  the  insured  retained  an  insura-  ance   upon    goods   "contained    in   a 

hie  interest  at  the  time  of  the  fire,  brick  building  situate,  etc.,"  against 

There  was  no  provision  in  the  policy  "lighting  the  premises  insured,  by 

relating  to  a  change  of  interest  in  camphine  or  spirit  gas,"  held  to  be 

the  property,  and  the  question  was  good    and    to   preclude   the   use    of 

whether  before  the  fire  the  insured  spirit  gas  as  a  means  of  lighting  in 

had  lost  all  insurable  interest.  and   about  the   goods  at  the   place 

188 This    clause    is    found    in    the  where  they   were   described  to  be: 

standard    policies    in    use    in    the  Stettiner    v.    Granite    Ins.    Co.,    5 

states   of   New   York,    New   Jersey,  Duer  (N.  Y.)  594  (1856). 
Connecticut,    Rhode    Island,    Louis- 


259 


CHANGE    IN    INTEREST,    TITLE   OR   POSSESSION. 


§    265 


possession  of  the  subject  of  insurance  (except  change  of  occupants 
without  increase  of  hazard),  whether  by  legal  process  or  judgment, 
or  by  voluntary  act  of  the  insured  or  otherwise.190 

§  265.  Scope  of  provision. — This  provision  is  very  broad,  and  pro- 
vides that  notice  of  all  such  changes  must  be  given  to  the  company 
in  order  that  it  may  cancel  the  policy  if  it  desires  so  to  do.  But 
under  it  only  material  changes  in  the  title  avoid  the  policy.191  The 
appointment  of  a  receiver  is  not  such  a  change  in  the  title  or 
possession  of  the  property  as  to  avoid  a  policy  which  contains  the 
provision  that  "if  any  change  takes  place  in  the  title  or  posses- 
sion of  the  property,  whether  by  sale  or  judicial  decree,  without 
notice  to  the  company,  and  its  consent  indorsed  thereon,  then  the 
policy  shall  be  void;"192  nor  is  a  change  of  receivers  such  a  change 


""This  clause  is  found  in  the 
standard  policies  of  New  York,  New 
Jersey,  Connecticut,  Rhode  Island, 
Wisconsin,  Louisiana,  North  Dakota, 
South  Dakota,  Michigan  and  North 
Carolina.  The  Iowa  form  is  as  fol- 
lows: "Or  if  any  change  or  diminu- 
tion other  than  by  the  death  of  the 
insured  take  place  in  the  interest, 
title  or  possession  of  the  subject  of 
the  insurance  (except  change  of  oc- 
cupants without  increase  of  haz- 
ard); or  if  any  other  person  than 
the  insured  now  have  or  shall  here- 
after acquire  any  interest  in  or  lien 
on  the  property  insured,  or  any  part 
thereof;  or  if  this  policy  be  assigned 
before  a  loss."  The  standard  forms 
of  Massachusetts,  Minnesota  and 
Maine  provide  that  the  policy  shall 
be  void  if  "without  such  assent  the 
said  property  be  sold  or  the  policy 
assigned."  The  New  Hampshire  pol- 
icy provides  that  the  policy  shall  be 
"void  and  inoperative  during  the  ex- 
istence or  continuance  of  the  acts 
or  conditions  of  things  stipulated 
against  as  follows:  *  *  *  or  if, 
without  such  assent,  the  said  proper- 


ty shall  be  sold,  or  this  policy  as- 
signed." 

191  Barnes  v.  Union,  etc.,  Ins.  Co., 
51   Me.   110,   81  Am.   Dec.   562,  and 
note    (1863).     See  notes  in  59  Am. 
Dec.  307  and  28  Am.  Dec.  154.     As 
to  the  effect  of  a  temporary  aliena- 
tion, see  Hill  v.  Middlesex,  etc.,  As- 
sur.     Co.,     174     Mass.     542     (1899). 
Where  the  insurer  consented  to  the 
transfer  it  was  held  that  the  pro- 
vision was  violated  by  a  retransfer 
without  the  consent  of  the  company: 
St.  Onge  v.  Westchester  F.  Ins.  Co., 
80  Fed.  703  (1897).     A  change  which 
increases  the  interest  of  the  insured 
is  not  such  a  change  of  ownership 
as  requires  notice  to  be  given  to  the 
company,  under  the  terms  of  a  sub- 
rogation   contract    which    provides 
that  the  mortgagee  shall  notify  the 
company  of  any  change  in  the  inter- 
est:    Dodge  v.  Hamburg,  etc.,  Ins. 
Co.,    4    Kan.    App.    415,    46    Pac.    25 
(1896).     See  §  46,  supra. 

192  Georgia,  etc.,  Ins.  Co.  v.  Bart- 
lett,    91   Va.    305,    50    Am.    St.    832 
(1895).     See   also,    Union   Bank   of 
Chicago  v.  Kansas  City  Bank,  136 
U.  S.  223  (1890). 


§    266  THE    STANDARD   POLICY.  260 

of  possession  or  title  as  will  invalidate  the  policy.193  Where,  after 
the  sale  of  property  under  foreclosure  and  before  the  expiration  of 
the  time  to  redeem,  property  is  insured  for  the  benefit  of  a  mortgagee, 
as  its  interest  may  appear,  and  the  mortgagee  pays  the  premium,  the 
non-redemption  from  the  mortgage  sale  by  the  owner  of  the  property 
does  not  work  an  alienation  of  the  property  so  as  to  defeat  the  policy.194 

An  agreement  between  the  owner  of  the  property  and  another  per- 
son to  represent  to  the  creditors  of  the  owner,  for  the  purpose  of  pre- 
venting a  levy  and  attachment,  that  the  property  had  been  sold  to 
such  other  person,  does  not  avoid  the  policy.195 

Like  other  provisions  for  the  benefit  of  the  insurer,  this  provision 
against  alienation  may  be  waived.196  The  notice  may  be  given  to  the 
person  who  signed  the  policy,  as  the  agent  of  the  company,  when 
the  insured  has  no  notice  that  such  person  has  ceased  to  be  an  agent.197 

§  266.  Transfer  of  part  interest. — Whether  a  transfer  of  a  part 
interest  in  the  insured  property  invalidates  a  policy  depends  upon  the 
particular  language  of  the  provision.  Where  the  prohibition  is  mere- 
ly upon  the  sale  or  conveyance  of  the  property  it  is  held  that  it  is 
not  violated  by  the  sale  of  anything  less  than  the  entire  interest  of 
the  insured.198  Conditions  restricting  the  right  of  alienation  are 
strictly  construed  against  the  insurer.  The  general  rule  is  that  such 
a  condition  refers  only  to  an  absolute  transfer  of  the  entire  interest 
of  the  insured  which  completely  divests  him  of  his  insurable  interest. 
Any  sale  or  transfer  short  of  this  is  not  within  the  scope  of  such  a 
condition.199  But  a  provision  to  the  effect  that  the  policy  shall  be 

193  Thompson   v.   Phenix   Ins.   Co.,  some  states  the  effect  is  to  suspend 
136  U.  S.  287  (1890).  the    policy.     Provisions    forbidding 

194  Washburn     Mill     Co.     v.     Fire  a  change  of  title  without  the  consent 
Ass'n,  60  Minn.  68,  51  Am.  St.  500  of  the   insurer  are  reasonable   and 
(1895).  have  always  been  enforced:     Cum- 

198  Orrell  v.  Hampden  F.  Ins.  Co.,  mins  v.  National  F.  Ins.  Co.,  81  Mo. 

13  Gray  (Mass.)  431  (1859).  App.  291  (1899). 

186  Stuart  v.  Reliance  F.  Ins.  Co.  198  Cowan  v.  Iowa  State  Ins.  Co., 

(Mass.),  60  N.  E.  929  (1901).  40  Iowa  551,  20  Am.  Rep.  583  (1875); 

m  Whitney  v.  American  Ins.  Co.  Scanlon  v.  Union  F.  Ins.  Co.,  4  Biss. 

(Cal.),  56  Pac.  50  (1899).  A  breach  (C.  C.)  511  (1869).  See  also,  Stet- 

of  this  condition  renders  the  policy  son  v.  Massachusetts,  etc.,  Ins.  Co., 

ipso  facto  void:  Farmers',  etc.,  Ins.  4  Mass.  330,  3  Am.  Dec.  217  (1808). 

Ass'n  v.  Price,  112  Ga.  264,  37  S.  E.  199  Clinton  v.  Norfolk,  etc.,  Ins.  Co., 

4^7  (1900).  As  elsewhere  noted,  in  176  Mass.  486,  57  N.  E.  998,  79  Am. 


261  CHANGE   IN    INTEREST,    TITLE   OR   POSSESSION.  §    267 

void  if  there  is  a  sale,,  transfer  or  change  of  title  of  the  insured  prop- 
erty, is  broken  by  a  conveyance  of  an  undivided  interest  in  the  prop- 
erty, although  the  remaining  interest  of  the  insured  exceeds  in  value 
the  amount  of  the  policy.200 

A  conveyance  of  an  undivided  one-half  interest  in  the  property 
violates  a  condition  which  forbids  a  change  in  the  title  or  possession 
of  the  property,  whether  by  sale,  lease,  legal  process,  judicial  decree, 
or  voluntary  transfer  without  the  consent  of  the  company. 

§  267.  Executory  contract  of  sale. — The  execution  of  a  contract  of 
sale,  by  the  terms  of  which  the  title  is  to  remain  in  the  vendor  until 
the  purchaser  pays  the  deferred  payments,  is  not  a  violation  of  the 
condition  which  forbids  any  change  in  the  title  of  the  insured  prop- 
erty.201 So,  the  condition  is  not  broken  by  a  contract  of  sale  and 
the  part  payment  of  the  purchase-money  with  a  provision  for  the 
giving  of  possession  at  a  future  date,  where  the  loss  occurs  before  that 
time.202  But  where,  under  a  contract  for  the  sale  of  real  estate,  the 
purchaser  has  taken  possession,  and  nothing  remains  to  be  done  but 
to  make  the  deed  and  pay  the  balance  of  the  purchase  price,  there  is 
a  breach  of  condition,  although  the  contract  provides  that  it  is  to  be- 
come of  no  effect  if  default  is  made  in  the  payments  at  the  stipulated 
time.203  It  was  held  that  the  condition  was  broken  by  the  execu- 
tion of  a  written  contract  of  sale  which  passed  the  equitable  title  and 
beneficial  interest.204  In  this  case  the  court  said:  "The  rule  seems 
to  be  general  that  if  the  insured,  in  making  a  transfer  of  the  title, 

St.  325  (1900),  and  cases  there  cited.  27  Am.  Rep.  86   (1878);   Forward  v. 

See  note  to  Lane  v.  Maine,  etc.,  Ins.  Continental  Ins.  Co.,  142  N.  Y.  382, 

Co.,  28  Am.  Dec.  150   (1835).  25  L.  R.  A.  637  (1894). 

200  Western,  etc.,  Ins.  Co.  v.  Riker,  202  Kempton  v.   State   Ins.   Co.,   62 
10  Mich.  279  (1862).  Iowa  83,  17  N.  W.  194  (1883). 

201  Home  Ins.  Co.  v.  Bethel,  142  111.  203  Davidson  v.  Hawkeye  Ins.  Co., 
537,  32  N.  E.  510   (1892).     See  also,  71  Iowa  532,  32  N.  W.  514,  60  Am. 
Grable  v.  German  Ins.  Co.,  32  Neb.  Rep.  818    (1887).     A  transfer  from 
645,  49  N.  W.  713   (1891).     Contra:  a  mortgagor  to  a  mortgagee  before 
Skinner  v.  Houghton,  92  Md.  68,  48  the  fire,  which  is  not  accepted  until 
Atl.    85    (1900).     A    condition    pro-  the  day  after  the  fire,  will  not  avoid 
hibiting    any    sale    or    transfer,    or  the  policy:       Pioneer  Sav.,  etc.,  Co. 
any  change  in  the  possession  of  the  v.  Providence,  etc.,  Ins.  Co.,  17  Wash, 
property,  does  not  apply  to  a  mere  175,  38  L.  R.  A.  397  (1897). 
executory  contract  for  a  sale  with-  2W  Cottingham  v.  Fireman's  Fund 
out  change  of  possession:     Brown-  Ins.  Co.,  90  Ky.  439,  14  S.  W.  417, 
ing  v.  Home  Ins.  Co.,  71  N.  Y.  508,  9  L.  R.  A.  627  (1890). 


§    267  THE    STANDARD   POLICY.  262 

retains  an  interest  in  any  of  the  insured  property,  the  policy  is  not 
vacated  by  a  sale.  Pursuant  to  this  rule,  it  has  been  held  in  a  num- 
ber of  cases,  and  by  elemental}7  writers,  that  the  sale,  in  order  to 
vacate  the  policy,  must  be  of  the  legal  title;  that  the  sale  of  a  mere 
equity,  the  vendor  holding  the  legal  title,  will  not  suffice  to  va- 
cate the  insurance.  It  is  believed  that  the  rationale  of  this  rule 
is  that  the  vendor  in  such  cases,  as  the  owner  of  the  legal  title,  he 
not  having  parted  with  it,  retains  the  risk  of  the  property — that  is, 
the  risk  of  the  property  remains  with  the  legal  title  and  the  loss  or 
destruction  of  the  property  falls  upon  the  owner  of  the  legal  title; 
and  under  that  view  it  is  believed  that  if  the  owner  has  sold  the 
equitable,  but  not  the  legal  title,  he  has  not  parted  with  his  insurable 
interest  in  the  property.  But  in  this  state  the  purchaser  of  real 
estate  by  a  title  bond  takes  the  risk  of  the  property.  He  is  the  bene- 
ficial owner  of  it,  and  its  loss  or  destruction  falls  upon  him  and  not 
the  vendor.  It  is  the  vendor's  parting  with  the  beneficial  interest 
in  the  property  that  vacates  his  contract  of  insurance,  and  where  the 
sale  of  the  legal  title  is  necessary  to  deprive  the  owner  of  such  interest, 
the  sale  of  the  equitable  title  only  will  not  be  sufficient  for  that  pur- 
pose. But  where,  as  in  this  state,  the  beneficial  interest  is  passed  to 
the  vendee  of  the  equitable  title,  the  contract  of  insurance  is  vacated 
by  such  sale.  The  vendee  in  such  cases  assumes  all  risk  of  loss  or  de- 
struction of  the  property." 

Where  the  policy  contains  a  provision  invalidating  it  "if  any 
change  take  place  in  the  interest,  title  or  possession  of  the  subject  of 
insurance/'  it  is  not  invalidated  by  an  agreement  to  exchange  the 
insured  property,  which  was  to  take  effect  on  a  specified  date  in  the 
future,  but  which  was  never  in  fact  executed.  The  court  said  that 
"it  was  simply  an  agreement  to  in  the  future  make  such  a  change, 
which  was  never  done.  It  is  true  that  the  policy  stipulates  against 
a  change  of  interest,  or  change  of  title,  or  change  of  possession,  but 
there  was  no  change  of  either.205  A  contract  for  the  sale  of  the  in- 
sured property  does  not  violate  this  condition  where  the  property  is 
not  passed  to  the  purchaser,  although  a  portion  of  the  purchase-money 
is  paid.206  The  word  "interest"  is  broader  than  the  word  "title," 

206  Erb  v.   German,   etc.,   Ins.   Co.,        20°  Boston  Ice  Co.  v.  Royal  Ins.  Co., 
98  Iowa  606,  67  N.  W.  583,  40  L.  R.     12  Allen    (Mass.)   381,  90  Am.  Dec. 
A.  845    (1896).     See  also,  Washing-     151   (1866). 
ton  F.  Ins.  Co.  v.  Kelly,  32  Md.  421, 
3  Am.  Rep.  149  (1870). 


263 


CHANGE   IX    INTEREST,    TITLE   OR   POSSESSION. 


§    268 


and  includes  both  legal  and  equitable  rights.  Hence,  where  the  pol- 
icy provides  that  it  shall  be  void  if  any  change  takes  place  in  the 
interest  of  the  insured,  whether  by  voluntary  act  of  the  insured  or 
otherwise,  an  executory  agreement  to  convey  the  insured  premises 
under  which  the  vendee  takes  possession  and  pays  part  of  the  pur- 
chase price  is  a  breach  of  the  condition.207 


§  268.  Incumbrances. — The  weight  of  authority  supports  the  view 
that  the  execution  of  a  mortgage  on  the  insured  premises  is  not  a 
breach  of  the  condition  against  a  change  of  title,  interest  or  posses- 
sion.208 Nor  is  this  provision  violated  by  the  existence  of  a  mortgage 
on  the  property  at  the  time  the  policy  was  issued,  as  the  condition  re- 
fers only  to  subsequent  changes.209  Policies  sometimes  contain  con- 
ditions requiring  the  disclosure  of  existing  incumbrances,  and  render- 
ing the  contract  void  if  this  is  not  done.  No  such  provision  appears 
in  the  standard  form  under  consideration.210 

Of  course  the  execution  of  a  mortgage  for  the  purpose  of  paying 
off  a  mortgage  which  was  in  existence  at  the  time  the  policy  was 


207  Gibb  v.  Philadelphia  F.  Ins.  Co., 
59  Minn.  267,  61  N.  W.  137,  50  Am. 
St.  405  (1894);  Trumbull  v.  Portage, 
etc.,    Ins.    Co.,   12   Ohio   305    (1843). 
As  to  the  meaning  of  the  word  "in- 
terest," see  Walradt  v.  Phrenix  Ins. 
Co.,  136  N.  Y.  375,  32  N.  E.  1063,  32 
Am.  St.  752    (1893).     In  Skinner  & 
Sons'   Co.  v.   Houghton,   92  Md.   68, 
48  Atl.  85    (1900),  it  was  held  that 
a  contract  for  the  sale  of  the  insured 
premises   was   a   breach   of   a   con- 
dition which  provided  that  the  pol- 
icy  should   be  void   if  any   change 
take  place  in  the  interest,  title  or 
possession  of  the  property,  whether 
by  legal  process  or  by  voluntary  act 
of  the  insured. 

208  Judge  v.  Connecticut  F.  Ins.  Co., 
132  Mass.   521    (1882);    Commercial 
Ins.   Co.   v.    Spankneble,   52   111.    53 
(1869);  Peck  v.  Girard,  etc.,  Ins.  Co., 
16  Utah  121,  67  Am.  St.  600  (1897); 
Barry  v.  Hamburg,  etc.,  Ins.  Co.,  110 
N.  Y.  1   (1888);   Conover  v.  Mutual 


Ins.  Co.,  1  N.  Y.  290  (1848);  Hart- 
ford, etc.,  Ins.  Co.  v.  Lasher  Stock- 
ing Co.,  66  Vt.  439,  29  Atl.  629,  44 
Am.  St.  859  (1894);  Rice  v.  Tower, 
67  Mass.  426  (1854);  Loy  v.  Home 
Ins.  Co.,  24  Minn.  315,  31  Am.  Rep. 
346  (1877);  Byers  v.  Farmers'  Ins. 
Co.,  35  Ohio  St.  606,  35  Am.  Rep. 
623  (1880);  Sun  Fire  Office  v.  Clark, 
53  Ohio  St.  414,  42  N.  E.  248,  38  L.  R. 
A.  562  (1895);  Smith  v.  Monmouth, 
etc.,  Ins.  Co.,  50  Me.  96  (1863); 
Taylor  v.  Merchants',  etc.,  Ins. 
Co.,  83  Iowa  402,  49  N.  W.  994 
(1891);  Germania  F.  Ins.  Co.  v. 
Stewart,  13  Ind.  App.  627,  42  N.  E. 
286  (1895);  Forehand  v.  Niagara 
Ins.  Co.,  58  111.  App.  161  (1894). 
See  also,  Nussbaum  v.  Northern  Ins. 
Co.,  37  Fed.  524,  1  L.  R.  A.  704 
(1889). 

209  Morotock  Ins.  Co.  v.  Rodefer,  92 
Va.  747,  53  Am.  St.  846  (1896). 

210  See  note  to  §  258,  supra. 


§    268  THE    STANDARD    POLICY.  264 

executed  is  not  a  breach  of  this  provision  against  the  creation  of  a 
future  incumbrance.211 

But  there  are  some  authorities  which  hold  that  the  execution  of  a 
mortgage  results  in  a  change  of  the  title  or  interest  of  the  mort- 
gagor. Thus,  in  Texas  it  was  held  that  the  execution  of  a  mortgage 
on  the  insured  property  is  a  breach  of  the  condition  against  any 
"change  in  the  interest  of  the  insured,  whether  by  sale,  transfer  or 
conveyance."212  So,  the  giving  of  a  mortgage  with  a  power  of  sale 
has  been  held  a  violation  of  the  condition  against  alienation.213  The 
execution  of  a  chattel  mortgage  on  partnership  property  by  one  of 
the  partners  to  secure  a  personal  debt  violates  a  condition  which 
provides  that  if  any  change  takes  place  in  the  interest,  title,  or  pos- 
session of  the  property,  the  policy  shall  be  void.214 

A  mortgage  on  the  insured  property  by  a  person  who  holds  the 
legal  title  will  not  avoid  a  policy  under  a  prohibition  against  changes 
in  the  title  without  the  consent  of  the  company  indorsed  upon  the 
policy,  if  such  mortgage  is  merely  the  obligation  of  the  mortgagor 
and  not  of  the  insured.215  The  giving  of  a  mortgage  is  a  material 
alteration  of  the  ownership  of  the  property  insured,  under  a  policy 
which  provides  that  "all  alienations  and  alterations  in  the  ownership, 
situation  or  state  of  the  property"  shall  invalidate  the  policy.216 
Where  the  policy  contains  a  condition  against  a  change  of  title  and 
the  creation  of  incumbrances,  a  mere  paper  transfer,  without  a  bill  of 
sale  and  without  consideration,  and  without  a  delivery  of  the  posses- 
sion of  the  property,  is  not  a  breach  of  the  condition.217  Where  the 
policy  contains  a  condition  that  it  shall  be  void  if  there  is  any  change 
in  the  title,  or  the  creation  of  an  incumbrance,  and  to  which  is  attached 
a  mortgage  slip  protecting  the  rights  of  a  mortgagee  against  a  breach 
of  condition  by  the  mortgagor,  the  rights  of  such  mortgagee  are  not 

211  McKibban  v.   Des  Moines,  etc.,        214  Olney   v.    German    Ins.   Co.,   88 
Ins.  Co.  (Iowa),  86  N.  W.  38  (1901);      Mich.  94,  50  N.  W.  100,  13  L.  R.  A. 
Aurora  F.  Ins.  Co.  v.  Eddy,  55  111.     684   (1891). 

213  (1870);  Koshland  v.  Home,  etc.,  215  Hoose  v.   Prescott  Ins.   Co.,   84 

Ins.  Co.,  31  Ore.  321,  49  Pa"c.  864,  50  Mich.  309,  47  N.  W.  587,  11  L.  R.  A. 

Pac.  567  (1897).  340  (1890). 

212  East  Texas  F.  Ins.  Co.  v.  Clarke,  21°  Edmands   v.    Mutual,   etc.,    Ins. 
79  Tex.  23,  15  S.  W.  166,  11  L.  R.  A.  Co.,  1  Allen  (Mass.)  311  (1861). 
293  (1890).  217  Forward  v.  Continental  Ins.  Co., 

2I3Sossaman  v.  Pamlico,  etc.,  Ins.  142  N.  Y.  382,  25  L.  R.  A.  637 
Co.,  78  N.  C.  145  (1878).  (1894). 


265  CHANGE    IN    INTEREST,    TITLE   OR    POSSESSION.  §    269 

affected  by  a  transfer  of  the  title  or  the  creation  of  an  incumbrance  by 
the  mortgagor.218 

§  269.  Defeasible  conveyances. — A  deed  absolute  in  form,  but  in- 
tended as  a  mortgage,  is  not  a  breach  of  the  condition  that  the  policy 
will  be  void  if  there  is  any  change  in  the  title  or  possession.219  Such 
conveyances  are  treated  as  simply  incumbrances,  and  hence  come 
within  the  rule  stated  in  the  preceding  section.  The  fact  that  a  deed 
absolute  in  form  is  recorded,  and  the  defeasance  is  not,  does  not 
change  the  rule,  although  a  statute  provides  that  persons  having 
no  notice  of  an  unrecorded  instrument  of  defeasance  shall  not  be 
affected  thereby.220  A  conveyance  of  real  estate  by  a  debtor  to  a  cred- 
itor under  the  provisions  of  the  Georgia  code  is  not  an  alienation 
of  the  property  within  the  prohibition  against  a  change  of  title.221 

§  270.  Invalid  conveyances. — A  deed  to  the  property  covered  by 
the  policy,  executed  by  the  insured  while  insane,  is  not  a  violation 
of  the  condition.222  So,  the  rights  of  the  insured  are  not  affected 
by  a  sale  of  the  property  made  by  her  husband  without  her  consent.223 
But  a  voluntary  conveyance  is  a  breach  of  the  condition  against 
alienation,  although  it  is  without  consideration.22* 

218  Phenix  Ins.  Co.  v.  Omaha  Loan,  ~°  Bryan  v.  Traders'  Ins.  Co.,  145 

etc.,  Co.,  41  Neb.  834,  60  N.  W.  133,  Mass.  389,  14  N.  B.  454  (1887).    See 

25    L.    R.    A.    679    (1894);    Boyd    v.  Foote  v.   Hartford  F.   Ins.   Co.,  119 

Thuringia  Ins.  Co.  (Wash.),  65  Pac.  Mass.   259    (1876);    Dailey  v.  West- 

785   (1901).  Chester  F.    Ins.   Co.,   131   Mass.    173 

218  German  Ins.  Co.  v.  Gibe,  162  111.  (1881). 

251,  44  N.  E.  490  (1896);  Barry  v.  221  Phoenix  Ins.  Co.  v.  Asberry,  95 
Hamburg,  etc.,  Ins.  Co.,  110  N.  Y.  Ga.  792,  22  S.  B.  717  (1895). 
1,  17  N.  E.  405  (1888).  Contra:  ^  Gerling  v.  Agricultural  Ins.  Co., 
Western,  etc.,  Ins.  Co.  v.  Riker,  10  39  W.  Va.  689,  20  S.  B.  691  (1894). 
Mich.  279  (1862);  Adams  v.  Rocking-  223  Commercial  Ins.  Co.  v.  Spank- 
ham,  etc.,  Ins.  Co.,  29  Me.  292  neble,  52  111.  53,  4  Am.  Rep.  582 
(1849);  Tomlinson  v.  Monmouth,  (1869);  German  Ins.  Co.  v.  York,  48 
etc.,  Ins.  Co.,  47  Me.  232  (1859).  But  Kan.  488,  29  Pac.  586,  30  Am.  St. 
in  Bemis  v.  Harbor  Creek,  etc.,  Ins.  313  (1892). 

Co.  (Pa.),  49  Atl.  769  (1901),  it  was  224  Home    F.    Ins.    Co.    v.    Collins 

held  that  a  deed  absolute  in  form,  (Neb.),  85  N.  W.  54  (1901);  Brown 

and  containing  no  intimation  that  it  v.   Cotton,  etc.,  Ins.  Co.,   156  Mass. 

is  not  an  absolute  conveyance,  is  a  587,  31  N.  E.  691  (1892). 
breach  of  the  condition. 


§    271  THE    STANDARD    POLICY.  266 

§  271.  Sale  with  purchase-money  mortgage. — A  condition  pro- 
hibiting a  change  of  title,  interest  or  possession  is  broken  by  the  exe- 
cution and  delivery  of  a  deed  and  the  taking  back  of  a  mortgage  to 
secure  the  payment  of  the  purchase-money.225  The  contrary  is  held  in 
Ohio  on  the  theory  that  only  a  transfer  of  the  entire  interest  of 
the  insured  violates  this  condition.226 

.  §  272.  Conveyance  to  the  wife  of  insured. — A  transfer  of  the  in- 
sured property  to  a  third  party,  and  by  such  party  to  the  wife  of 
the  insured,  is  a  breach  of  this  condition  and  renders  the  policy 
void.227  A  marriage  contract  conveying  land  to  the  wife,  but  pro- 
viding for  a  reversion  should  she  prove  unfaithful  or  fail  to  survive 
the  grantor,  vests  such  a  title  in  the  wife  as  to  come  within  the  pro- 
hibition against  change  of  title,  and  the  fact  that  after  the  loss 
the  husband  secured  a  divorce  can  not  authorize  a  recovery  by  the 
husband  on  the  policy.228  Under  the  Illinois  statute,  which  pro- 
vides that  no  conveyance  of  a  homestead  estate  shall  be  valid  unless 
signed  and  acknowledged  by  the  wife,  it  is  held  that  a  conveyance 
by  the  insured  to  his  wife  does  not  constitute  such  a  change  of  title 
as  would  avoid  the  policy,  where  the  wife  does  not  join  in  the  execu- 
tion and  acknowledgment  of  the  deed.229 

§  273.  Transfers  by  and  between  partners. — A  condition  making 
the  policy  void  if  there  is  any  change  in  the  title  or  interest  of 
the  insured  without  the  consent  of  the  company  is  not  violated  by  the 

225  Savage  v.  Howard  Ins.  Co.,  52  Co.,  48  Ohio  St.  533,  29  N.  E.  278,  14 

N.  Y.  502,  11  Am.  Rep.  741    (1873);  L.  R.  A.  431   (1891). 

Kitts  v.  Massasoit  Ins.  Co.,  56  Barb.  ~~  Walton  v.  Agricultural  Ins.  Co., 

(N.   Y.)    177    (1867);    Tittemore    v.  116  N.  Y.  317,  22  N.  E.  443,  5  L.  R. 

Vermont,  etc.,   Ins.   Co.,    20  Vt.   546  A.   677    (1899);    Baldwin  v.  Phoenix 

(1848).     In  Sanders  v.  Hillsborough,  Ins.  Co.,  60  N.  H.  164  (1880);  Lang- 

etc.,  Ins.  Co.,  44  N.  H.  238    (1862),  don    v.    Minnesota,    etc.,    Ass'n,    22 

notice  of  the  transaction  was  given  Minn.  193    (1875).     See  also,  Oakes 

to  the  company  and  consent  to  the  v.  Manufacturers',  etc.,  Ins.  Co.,  131 

continuance  of  the  insurance  was  in-  Mass.   164    (1881);    Glaze   v.   Three 

dorsed     on    the     policy.     See    also,  Rivers,  etc.,  Ins.  Co.,  87  Mich.  349, 

Farmers'  Ins.  Co.  v.  Archer,  36  Ohio  49  N.  W.  595  (1891). 

St.    608     (1881);     California    State  ^Cummins    v.    National    F.    Ins. 

Bank  v.  Hamburg,  etc.,  Ins.  Co.,  71  Co.,  81  Mo.  App.  291  (1899). 

Cal.  11,  11  Pac.  798  (1886).  ^  Kitterlin  v.  Milwaukee,  etc.,  Ins. 

^Blackwell   v.    Miami,    etc.,    Ins.  Co.,   134   111.   647,   25   N.   E.   772,   10 

L.  R.  A.  220  (1890). 


267  CHANGE    IN    INTEREST,    TITLE    OR   POSSESSION.  §    273 

sale  by  one  partner  to  another  of  his  interest  in  the  property,  as 
this  provision  has  no  reference  to  a  transfer  of  interest  between 
partners.230  This  is  the  general  rule,  but  in  Iowa,  under  an  in- 
surance policy  on  partnership  property,  which  provided  that  it  should 
be  void,  "if  the  title  of  the  property  is  transferred,  incumbered  or 
changed,"  a  sale  by  one  partner  of  his  interest  to  another  partner 
will  avoid  the  policy.  It  was  held  that  the  condition  was  broken 
where  two  of  the  partners  sold  and  delivered  their  interests  to  the 
other  partner.  The  court  said:  "This  policy  is  conditioned  against 
the  property  being  sold  or  transferred,  or  any  change  taking  place 
in  the  title  and  possession.  Prior  to  the  sale  and  delivery  to  the 
plaintiff  the  title  and  possession  were  in  the  firm,  consequently  there 
was  not  only  a  change  and  transfer  in  the  title  but  also  in  the  pos- 
session. If  it  should  be  said  that  the  title  was  in  the  individuals,  and 
not  in  the  firm,  still  there  was  a  change  in  the  possession,  for  un- 
questionably it  was  the  firm  that  was  using  and  had  possession  of 
the  property.''231  So,  it  was  held  that  the  retiring  of  one  partner 
from  participation  in  the  business  management  or  control  of  the 
partnership  business,  reserving  to  himself  simply  the  right  to  see 
that  the  stock  of  goods  is  kept  up  to  its  value  at  the  time  of  re- 

230  Wood  v.  American  F.  Ins.  Co.,  Vaughan,  88  Va.  832,   14  S.  E.   754 

149  N.  Y.  382,  52  Am.  St.  733  (1896);  (1892).     Agreement  of  one  partner 

Phenix  Ins.  Co.  v.  Holcombe,  57  Neb.  to    sell    his    interest    to    another: 

622,  73  Am.  St.  532  (1899);  Drennen  Georgia,   etc.,    Ins.   Co.   v.   Hall,   94 

v.  London  Assur.  Corp.,  20  Fed.  657  Ga.     630,     21     S.     E.     828     (1894); 

(1884);  Burnett  v.  Eufaula,  etc.,  Ins.  Allemania  F.  Ins.  Co.  v.  Peck,  133 

Co.,    46    Ala.    11    (1871);    Sun    Fire  111.    220,    24   N.   E.   538,    23  Am.   St. 

Office  v.  Wich,  6  Colo.  App.  103,  39  610   (1890). 

Pac.  587  (1895);  Powers  v.  Guard-  231  Oldham  v.  Anchor,  etc.,  Ins.  Co., 
ian,  etc.,  Ins.  Co.,  136  Mass.  108,  49  90  Iowa  225,  57  N.  W.  861  (1894). 
Am.  Rep.  20  (1883);  New  Orleans  As  supporting  the  rule  that  a  trans- 
Ins.  Ass'n  v.  Holberg,  64  Miss.  51,  fer  from  one  partner  to  another  is 
8  So.  175  (1886);  Wilson  v.  Genesee,  within  this  provision,  see  Buckley 
etc.,  Ins.  Co.,  16  Barb.  (N.  Y.)  511  v.  Garrett,  47  Pa.  St.  204  (1864); 
(1853);  Hoffman  v.  yEtna  F.  Ins.  Keeler  v.  Niagara  F.  Ins.  Co.,  16 
Co.,  32  N.  Y.  405,  88  Am.  Dec.  337  Wis.  550,  84  Am.  Dec.  714  (1863); 
(1865);  Tallman  v.  Atlantic,  etc.,  Finley  v.  Lycoming,  etc.,  Ins.  Co., 
Ins.  Co.,  29  How.  Pr.  (N.  Y.)  71  30  Pa.  St.  311,  72  Am.  Dec.  705 
(1865);  West  v.  Citizens'  Ins.  Co.,  (1858);  Hartford  F.  Ins.  Co.  v.  Ross, 
27  Ohio  St.  1,  22  Am.  Rep.  294  23  Ind.  179,  85  Am.  Dec.  452  (1864); 
(1875);  Texas,  etc.,  Ins.  Co.  v.  Co-  Tillou  v.  Kingston,  etc.,  Ins.  Co.,  5 
hen,  47  Tex.  406,  26  Am.  Rep.  298  N.  Y.  405  (1851). 
(1877);  Virginia,  etc.,  Ins.  Co.  v. 


§    273  THE    STANDARD   POLICY.  2G8 

tiring  as  security  for  the  payment  of  the  amount  allowed  hy  the 
other  partner  for  his  interest,  is  such  a  change  of  possession,  if  not  of 
title,  as  to  avoid  the  policy  on  the  goods,  under  a  policy  which  provides 
that  it  shall  be  void  if  the  title  or  possession  of  the  property  is 
changed.232 

So,  a  change  in  the  firm  by  which  a  third  party  becomes  a  member 
of  the  firm  is  a  violation  of  the  condition  and  renders  the  policy 
void.233 

In  a  recent  ISTew  York  case,  where  the  policy  contained  a  pro- 
vision that  it  should  be  void  "if  the  property  be  sold  or  transferred, 
or  any  change  takes  place  in  the  title  or  possession,"  the  court  said  :234 
"The  contract  of  insurance  is  peculiarly  personal  in  its  nature,  and  the 
success  of  the  business  of  underwriting  depends  largely  upon  what  is 
known  as  the  moral  hazard.  It  is  a  well  established  principle  of  the 
common  law  that  every  man  has  the  right  to  determine  with  whom 
he  will  enter  into  contract  obligations.  The  insurer  is  induced  to 
issue  or  withhold  its  policy  after  carefully  scrutinizing  the  char- 
acter of  the  applicant  for  insurance.  It  is  of  the  utmost  importance 
to  the  company  to  ascertain  who  is  to  be  vested  with  the  title  and  pos- 
session of  the  property  sought  to  be  insured.  It  would  be  a  harsh  and 
indefensible  rule  that  required  an  underwriter  who  had  insured  an  in- 
dividual on  a  stock  of  goods  in  a  store  to  continue  the  insurance  after 
the  insured  had  taken  in  two  partners  and  formed  a  firm  wherein 
each  partner  was  vested  with  an  undivided  one-third  interest  of  the 

232  Jones    v.    Phoenix    Ins.    Co.,    97  lantic,  etc.,   Ins.   Co.,   51  Conn.  222, 
Iowa  275,  66  N.  W.  169  (1896).  250    (1883).     The    mere    dissolution 

233  Drennen     v.      London      Assur.  of  a  firm  does  not  destroy  the  joint 
Corp.,  20  Fed.  657  (1884);  Firemen's  interest   of    the    copartners   in    the 
Ins.  Co.  v.  Floss,  67  Md.  403,  10  Atl.  partnership  property  or  make  them 
139  (1887).     See  also,  Virginia,  etc.,  tenants  in  common.     The  property 
Ins.  Co.  v.  Thomas,  90  Va.  658,  19  S.  continues   as   partnership    property 
E.  454  (1894);  Card  v.  Phoenix  Ins.  until  it  is  disposed  of.     Until  this 
Co.,  4  Mo.  App.  424  (1877).  is  done  there  is  no  violation  of  the 

234  Germania  F.  Ins.  Co.  v.  Home  condition   against  a  change  in  the 
Ins.  Co.,  144  N.  Y.  195,  26  L.  R.  A.  title.     But  a  dissolution  of  the  part- 
591,   43   Am.   St.   749,   39   N.   B.   77  nership  and  a  division  of  the  part- 
(1894).     See    cases   cited    in    Beebe  nership  property  prior  to  the  fire  is  a 
v.  Ohio,  etc.,  Ins.  Co.,  93  Mich.  514,  violation    of    the    condition:     Roby 
18  L.  R.  A.  481    (1892).     See  also,  v.    American,    etc.,    Assur.    Co.,    120 
as   sustaining   this   doctrine,   Dren-  N.    Y.    510,    24    N.    E.    808    (1890); 
nen  v.  London  Assur.  Corp.,  20  Fed.  Dreher  v.  JEtna  Ins.  Co.,  18  Mo.  128 
657  (1884);  Card  v.  Phrenix  Ins.  Co.,  (1853). 

4  Mo.  App.  424  (1877);  Malley  v.  At- 


269  CHANGE    IX    INTEREST,    TITLE    OR   POSSESSION,  §    274 

property  covered  by  the  policy  without  having  been  offered  an  oppor- 
tunity to  examine  into  the  moral  and  business  character  of  the  two 
strangers  to  the  original  contract.  This  right  of  the  insurance  com- 
pany was  in  no  wise  invaded  when  this  court  held  that  a  sale  by  one 
partner  to  another  of  his  interest,  where  both  were  insured,  did  not 
avoid  the  policy.  It  is  only  when  a  stranger  is  to  be  brought  into 
contractual  relations  with  the  insurance  company  that  the  consent  of 
the  latter  is  essential/' 

§  274.  Transfers  between  joint  owners. — The  provision  prohibiting 
the  sale  of  insured  property  does  not  prevent  sales  and  transfers  of 
interests  as  between  joint  owners.235  Thus,  a  transfer  from  one  joint 
tenant  to  another  such  tenant  is  not  an  alienation  of  the  property.236 
But  a  transfer  from  one  tenant  in  common  to  another  is  within  the 
provision  against  "alienation  by  sale  or  otherwise."237 

§  275.  Legal  process  or  judgment. — The  clause  in  the  standard  pol- 
icy forbids  alienation  or  change  of  interest  by  legal  process  or  judg- 
ment as  well  as  by  voluntary  acts  of  the  insured.  This  provision 
is  valid;  and  its  violation,  as  by  confessing  judgment,  will  render  the 
insurance  void.238  It  is  not,  however,  broken  by  the  seizure  of  the 
goods  on  execution,239  as  the  mere  levy  of  an  execution  is  not  an  alien- 
ation of  the  property  so  long  as  the  right  of  redemption  remains.240 

A  change  of  title  or  interest  is  not  effected  by  a  delivery  of  an 
execution  to  an  officer  and  a  levy  thereunder.  As  said  in  New 
York:241  "The  interest  which  a  person  may  have  in  property  is 
affected  in  many  ways  without  producing  a  change  in  such  interest 

235  Hoffman  v.  ^Etna  P.  Ins.  Co.,  32  Pennsylvania,     etc.,     Ins.     Co.     v. 
N.  Y.  405,  88  Am.  Dec.  337    (1865).  Schmidt,  119  Pa.  St.  449  (1889). 

236  Lockwood    v.     Middlesex,    etc.,  2ia  Rice  v.  Tower,  1  Gray   (Mass.) 
Assur.    Co.,    47    Conn.    553    (1880);  426    (1854). 

Tillou  v.  Kingston,  etc.,  Ins.  Co.,  7  ^  Clark  v.  New  England,  etc.,  Co., 

Barb.  (N.  Y.)  570  (1850).  6   Gush.    (Mass.)    342,   53   Am.   Rep. 

237  Buckley  v.  Garrett,   47  Pa.   St.  44    (1850);   Greenlee  v.  North  Brit- 
204   (1864).  ish,  etc.,  Ins.  Co.,  102  Iowa  427,  63 

238  Dover  Glass  Works  v.  American  Am.  St.  455  (1897).    See,  also,  Wood 
F.  Ins.  Co.,  1  Marvel    (Del.)   32,  29  v.  American  F.  Ins.  Co.,  149  N.  Y. 
Atl.    1039,    65    Am.    St.    264    (1894).  382,  52  Am.  St.  733,  and  note  (1896). 
See   Olney  v.   German   Ins.   Co.,   88  241  Walradt  v.  Phrenix  Ins.  Co.,  136 
Mich.  94,  26  Am.  St.  281   (1891).    A  N.  Y.  375,  32  N.  B.  1063,  32  Am.  St. 
judgment  entered  on  a  warrant  of  752  (1893). 

an    attorney    is    an    incumbrance : 


§    275  THE    STANDARD    POLICY.  270 

as  that  term  is  generally  understood;  when  he  contracts  a  debt  or 
incurs  an  obligation  this,  in  a  broad  sense,  may  affect  such  interest, 
as  the  property  constitutes  the  means  of  payment;  and  his  pecuniary 
condition,  in  a  general  sense,  depends  upon  what  he  has  left  after  the 
discharge  of  all  his  debts  and  obligations.  The  debt  assumes  an- 
other form  by  the  recovery  of  a  judgment,  and  the  execution  is  a  pro- 
cess which,  when  delivered  to  an  officer,  clothes  him  with  authority 
to  enforce  the  collection  of  the  debt.  That  is  the  foundation  of  all  the 
subsequent  steps.  While  each  event  in  the  progress  of  the  proceedings 
for  collection  may  bring  the  debtor  and  creditor  into  closer  relations 
and  press  nearer  upon  the  property  of  the  debtor,  yet  his  title  or 
interest  in  the  property  is  not  divested  or  transferred  until  the  sale 
is  made  which  operates  in  law  to  transfer  his  interest  to  another. 
By  the  delivery  of  the  execution  and  levy  thereunder  the  officer  has 
simply  obtained  authority  at  some  future  time  and  in  the  mode 
prescribed  by  law  to  expose  the  property  of  the  debtor  for  sale,  and 
that  is  the  final  act  which  changes  the  title  and  interest  of  the 
debtor.  An  officer  has,  no  doubt,  in  law  and  from  the  necessities  of 
the  case,  a  sufficient  interest  in  the  property  levied  upon  to  enable  him 
to  protect  it  by  insurance  or  against  the  acts  of  wrongdoers,  other- 
wise the  proceedings  for  the  collection  of  the  debt  may  be  defeated, 
but  still  the  owner  retains  the  title  in  the  same  sense  that  he  did 
after  he  made  default  in  the  payment  of  the  debt,  which  as  we  have 
seen  is  the  basis  of  every  step  in  the  process  of  enforcement.  His 
interest  is,  no  doubt,  affected  by  the  issuing  of  the  execution  and  the 
levy,  but  that  is  also  true,  though  perhaps  in  a  remote  sense,  by 
contracting  the  debt.  The  words  'change  of  interest/  as  used  in  the 
policy,  are  substantially  synonymous  with  the  words  'change  of 
title/  and  neither  event  occurs  until  the  sale  upon  the  execution. 
It  may  be  asked  what  effect  is,  under  such  a  construction,  to  be  given 
to  the  word  'interest'  as  used  in  the  condition.  It  must  be  borne  in 
mind  that  the  standard  policy  now  in  use  is  so  framed  as  to  contain 
words  suitable  and  applicable  to  every  subject  of  insurance;  but  all 
the  provisions  are  not  necessarily  applicable  to  every  case.  That  must 
always  be  so  whenever  a  contract  in  the  same  form  and  expressed  in 
the  same  language  is  sought  to  be  applied  to  different  things  or  classes 
of  property.  The  subject  of  the  insurance,  its  condition  and  situation, 
and  the  surrounding  circumstances,  may  vary  so  as  to  render  words 
and  phrases  contained  in  the  policy  not  strictly  applicable.  There 
is  a  large  class  of  risks,  however,  to  which  the  word  'interest/  as  used 


271  CHANGE    IN    INTEREST,    TITLE    OR    POSSESSION.  §    276 

in  the  condition  under  consideration,  is  no  doubt  applicable.  Policies 
are  frequently  written  in  favor  of  parties  who  have  a  claim  on  the 
property  in  the  nature  of  a  lien,  to  secure  payment  of  a  debt  and, 
perhaps,  for  other  purposes." 

.Where  the  policy  provided  that  it  should  be  rendered  void  by  the 
"levying  of  an  execution,"  it  was  held  that  the  mere  issuance  of  an 
execution  and  the  advertisement  of  the  property  for  sale  by  the 
sheriff,  was  not  a  violation  of  the  provision.242  This  provision  is 
limited  to  acts  of  omission  or  commission  by  the  insured,  or  to  a 
change  of  possession  by  process  under  his  order  or  control.243 

Where  the  policy  contained  a  condition  that  it  should  be  void  "if 
any  change  takes  place  in  the  title  or  possession  of  the  property,  ex- 
cept in  case  of  succession  by  reason  of  the  death  of  the  insured, 
whether  by  sale,  transfer,  conveyance,  legal  process  or  judicial  de- 
cree," it  was  held  that  a  writ  of  attachment  was,  under  the  Wis- 
consin statute,  process,  and  that  therefore  the  policy  was  rendered 
invalid  by  the  levy  of  the  attachment  on  the  insured  property.  "There 
can  be  no  question,"  said  the  court,  "but  that  the  deputy  sheriff  took 
exclusive  possession  of  the  property  under  the  writ  and  that  a  change 
of  possession  of  the  property  took  place  by  legal  process  under  the 
language  of  the  condition."2'44 

An  illegal  levy,  assessment,  seizure  and  sale  of  the  insured  prop- 
erty do  not  violate  this  condition.245 

§  276.  By  judgment. — A  change  of  title  by  "judgment"  means 
change  of  title  through  judicial  sale.  Where  the  provision  merely 
referred  to  a  change  of  title,  ownership  or  possession  of  the  property, 
it  was  not  broken  by  a  sale  under  execution  where,  before  the  time 
for  redemption  had  expired,  the  husband  of  the  insured  paid  the 
money  to  redeem  the  property  under  an  agreement  that  the  pur- 
chaser would  convey  to  him,  and  the  property  was  destroyed  before 
the  conveyance  was  actually  made.  It  appeared  that  the  insured 
remained  in  undisputed  possession  until  the  loss,  and  never  agreed  that 
the  property  should  be  conveyed.246  There  is  no  change  of  title  until 

242  Caraher  v.   Royal   Ins.   Co.,   63  84  Wis.  80,  54  N.  W.  18,  36  Am.  St. 
Hun  (N.  Y.)  82  (1892).  907,  20  L.  R.  A.  267  (1893). 

243  Carey  v.  German,  etc.,  Ins.  Co.,  24B  Runkle  v.  Citizens'  Ins.  Co.,  6 
84  Wis.  80,  54  N.  W.  18,  36  Am.  St.  Fed.  143  (1881). 

907,  20  L.  R.  A.  267  (1893).  246  Lodge    v.    Capital    Ins.    Co.,    91 

244  Carey  v.  German,  etc.,  Ins.  Co.,     Iowa  103,  58  N.  W.  1089  (1894). 


§    277  THE    STANDAED   POLICY.  272 

the  period  of  redemption  expires.247     So,  a  sale  by  the  sheriff  does  not 
pass  title  until  his  deed  is  acknowledged  and  delivered.248 

§  277.  By  partition. — The  condition  prohibiting  a  change  in  the 
interest,  title  or  possession  of  the  property  is  broken  by  the  setting 
aside  of  the  insured  property  to  the  widow  of  the  insured  in  par- 
tition proceedings  after  his  death.  The  partition  of  the  property, 
whether  it  is  inter  se  or  by  judgment  or  decree,  effects  "a  change  in 
the  interest,  title  or  possession  of  the  property."249 

§  278.  Assignment  and  bankruptcy  proceedings. — A  general  as- 
signment of  the  property  of  the  insured  for  the  benefit  of  his  creditors 
violates  the  clause  which  provides  that  the  policy  shall  be  void,  "if  the 
property  or  any  interest  therein  be  sold  or  transferred."250  This  is  true 
under  a  policy  which  provides  that  "when  any  property  insured  by 
this  company  shall  be  taken  possession  of  by  a  mortgagee,  or  in  any 
way  be  alienated,  the  policy  shall  be  void."251  A  condition  against 
alienation  is  broken  by  a  transfer  of  the  property  by  the  wife  of  the 
insured,  who  held  the  title  as  security  for  a  debt  to  the  husband's 
assignee  in  insolvency.252  It  was  held  in  Kentucky  that  a  transfer  of 
goods  to  an  assignee  in  trust  to  pay  the  creditors  of  the  insured,  the 
insured  remaining  in  actual  possession,  did  not  violate  the  clause 
prohibiting  a  "transfer  of  the  interest  of  the  insured  by  sale  or 
otherwise,"  without  the  consent  of  the  company.253  So,  an  assignment 
for  the  benefit  of  creditors  by  one  member  of  a  firm  does  not  affect  the 

247  Wood  v.  American  F.  Ins.  Co.,  2DOOhio,    etc.,    Ins.    Co.   v.   Waters 
149  N.  Y.  382,  44  N.  E.  80,  52  Am.  (Ohio),    61   N.   E.   711    (1901);    Orr 
St.  733  (1894).  v.  Hanover  F.  Ins.  Co.,  158  111.  149, 

248  Collins  v.  London  Assur.  Corp.,  41  N.  E.  854  (1895).     See  also,  Small 
165  Pa.  St.  298,  30  Atl.  924   (1895).  v.  Westchester  F.  Ins.  Co.,  51  Fed. 

249Trabue  v.  Dwelling  House  Ins.  789  (1892);  Campbell  v.  German  Ins. 

Co.,  121  Mo.  75,  25  S.  W.  848,  23  L.  Co.    (Tex.  Civ.  App.),  31  S.  W.  310 

R.  A.   719    (1894).    See,  also,   Sher-  (1895). 

wood  v.  Agricultural  Ins.  Co.,  73  N.  251  Young  v.  Eagle  F.  Ins.  Co.,  14 

Y.    447,    29    Am.    Rep.    180    (1878);  Gray   (Mass.)  150,  74  Am.  Dec.  673 

Burbank  v.  Rockingham,  etc.,   Ins.  (1860). 

Co.,  24  N.  H.  550,  57  Am.  Dec.  300  252  Brown  v.  Cotton,  etc.,  Ins.  Co., 

(1852);    Barnes  v.  Union,  etc.,  Ins.  156  Mass.  587,  31  N.  E.  691   (1892). 

Co.,   51   Me.   110,   81   Am.   Dec.   562  K3  Phoenix  Ins.  Co.  v.  Lawrence,  4 

(1863);    Finley    v.    Lycoming,    etc.,  Mete.     (Ky.)    9,    81    Am.    Dec.    521 

Ins.  Co.,  30  Pa.  St.  311,  72  Am.  Dec.  (1862). 
705  (1858). 


273  CHANGE   IN    INTEREST,    TITLE   OR    POSSESSION.  §    279 

sole  and  undivided  ownership  by  the  firm  of  the  partnership  prop- 
erty.254 A  similar  provision  to  that  in  the  standard  policy  is  violated 
by  a  transfer  by  a  registrar  under  and  in  pursuance  of  the  bankruptcy 
act.265 

§  279.  Transfer  by  death. — The  clause  in  the  New  York  form  of 
policy  refers  to  any  change  in  the  title  "other  than  by  the  death  of  the 
insured."  By  the  weight  of  authority,  even  in  the  absence  of  this 
exception,  a  general  provision  forbidding  a  transfer  of  the  property 
will  be  construed  as  referring  to  a  voluntary  transfer,  and  not  to  a 
transfer  as  a  result  of  the  death  of  the  insured.256  Such  cases  distin- 
guish between  alienation  and  devolution,  one  being  the  act  of  the  party 
and  the  other  the  act  of  the  law.  But  some  decisions  hold  that  un- 
der the  language  of  the  policy  there  under  consideration  the  pass- 
ing of  the  title  by  devolution  upon  the  death  of  the  insured  terminates 
the  policy.257  This  was  the  effect  where  the  prohibition  was  against 
"a  change  of  title."258  Where,  after  the  death  of  the  insured,  his 
wife  rents  the  premises  to  tenants  without  the  consent  of  the  com- 
pany, the  provision  forbidding  a  change  of  occupancy  and  posses- 
sion is  violated.250 

§  280.  Change  of  possession. — The  prohibition  against  a  change, 
of  possession  does  not  apply  where  the  property  is  insured  for  the  joint 
benefit  of  partners,  and  is  transferred  from  one  partner  to  another.260 
There  is  no  change  of  possession  within  the  meaning  of  this  pro- 
vision where  the  insured  enters  into  an  oral  contract  to  lease  the  prop- 
erty and  the  intended  lessee  enters  into  actual  possession  under  a 

2MWood  v.  American  F.  Ins.  Co.,  N.  E.   139,   74  Am.   St.   161    (1899); 

149  N.  Y.  382,  44  N.  E.  80  (1897).  Planters',    etc.,    Ins.    Ass'n   v.    Dew- 

285  Perry  v.  Lorillard  Ins.  Co.,  61  berry  (Ark.),  62  S.  W.  1047   (1901). 

N.  Y.  214,  19  Am.  Rep.  272   (1874);  257  Sherwood    v.    Agricultural    Ins. 

Adams  v.  Rockingham,  etc.,  Ins.  Co.,  Co.,  73  N.  Y.  447,  29  Am.  Rep.  180 

29  Me.  292  (1849).  (1878). 

256  Pfister  v.  Gerwig,  122  Ind.  567,  258  Miller  v.   German   Ins.   Co.,   54 

23  N.  E.  1041  (1890);  Richardson  v.  111.  App.  53  (1894). 

German  Ins.  Co.,  89  Ky.  571,  13  S.  W.  209  Planters',    etc.,     Ins.    Ass'n    v. 

1,  8  L.  R.  A.  800  (1890);  Burbank  v.  Dewberry    (Ark.),    62    S.    W.    1047 

Rockingham,  etc.,  Ins.  Co.,  24  N.  H.  (1901). 

550,  57  Am.  Dec.  300   (1852);   Geor-  20°  Allemania  F.  Ins.  Co.  v.  Peck, 

gia   Home    Ins.    Co.   v.    Kinnier,    28  133  111.  220,  24  N.  E.  538  (1890).    But 

Gratt.  (Va.)  88   (1877);  Forest  City  see  cases  cited  at  §  273,  supra. 
Ins.  Co.  v.  Hardesty,  182  111.  39,  55 
18 — ELLIOTT  INS. 


§    281  THE   STANDARD    POLICY.  274 

parol  license  from  the  insured  for  the  mere  purpose  of  making  re- 
pairs.261 Leaving  the  property  in  charge  of  a  person  as  agent  of  the 
owner  is  not  a  change  of  the  possession  of  the  property.262  Nor  is 
there  a  change  of  possession  under  a  policy  which  is  payable  to  a  chat- 
tel mortgagee,  where  he  takes  possession  on  default  by  the  mort- 
gagor.263 But  the  execution  of  a  lease,  where  the  lessee  goes  into  pos- 
session, is  a  violation  of  the  condition  against  a  change  of  posses- 
sion.264 

A  policy  was  issued  upon  cotton  "owned  by  the  insured  or  held 
by  it  in  trust  or  on  commission."  The  insured  gave  its  receipts  to  the 
owners  and  thereafter  the  receipts  were  transferred  to  certain  rail- 
road companies,  which  received  bills  of  lading  therefor  from  the 
insured.  It  was  held  that  this  did  not  effect  a  change  of  posses- 
sion.265 

§  281.  Lease  of  the  property. — The  leasing  of  the  insured  prop- 
erty does  not  violate  a  condition  that  the  policy  shall  be  void  if  the 
property  be  sold  or  transferred,  or  any  change  take  place  in  the  title 
or  possession,  "whether  by  legal  process,  judicial  decree,  voluntary 
transfer  or  conveyance.266  Of  course,  a  lease  with  the  privilege  of 
purchase  at  any  time  during  the  term  does  not  violate  the  provision 
where  the  privilege  is  not  exercised.267 

IX.     Assignment. 

This  entire  policy  shall  be  void  *  *  *  if  this  policy  be  as- 
signed before  a  loss.2es 

281  Alkan  v.  New  Hampshire  Ins.  2ti7  Planters',  etc.,  Ins.  Co.  v.  Row- 
Co.,  53  Wis.  136,  10  N.  W.  91  land,  66  Md.  236,  7  Atl.  257  (1886). 
(1881).  208This  provision  is  found  in  the 

262  Shearman    v.    Niagara    F.    Ins.  standard  policies  of  New  York,  New 
Co.,  46  N.  Y.  526  (1871).  Jersey,    Connecticut,   Rhode   Island, 

263  Getman  v.  Guardian  F.  Ins.  Co.,  Wisconsin,  Louisiana,  North  Dakota, 
46  111.  App.  489  (1892).  South  Dakota,  Michigan,  North  Car- 

264  Wenzel  v.  Commercial  Ins.  Co.,  olina,   Iowa,   Massachusetts,   Minne- 
67  Cal.  438,  7  Pac.  817  (1885);  Smith  sota  and   Maine.     The  New   Hamp- 
v.   Phenix   Ins.   Co.    (Cal.),   23   Pac.  shire  policy  provides  that  the  policy 
383      (1890).     See     Fire     Ass'n     v.  shall  be  "void  and  inoperative  dur- 
Flournoy,  84  Tex.  632,  19  S.  W.  793,  ing  the  continuance  or  existence  of 
31  Am.  St.  89  (1892).  the  acts  or  conditions  of  things  stip- 

286  California  Ins.  Co.  v.  Union  ulated  against  as  follows:  *  *  * 

Compress  Co.,  133  U.  S.  387  (1890).  or  if,  without  such  assent,  the  said 

268  Rumsey  v.  Phoenix  Ins.  Co.,  1  property  shall  be  sold,  or  this  policy 

Fed.  396  (1880).  assigned." 


275  ASSIGNMENT.  §    282 

§  282.  Assignment  of  policy. — This  form  prohibits  an  assignment 
of  the  policy  before  loss.  The  provision  is  reasonable  and  valid,269 
and  is  not  an  unlawful  restraint  upon  the  right  to  transfer  prop- 
erty.270 

Fire  insurance  contracts  are  personal  in  their  nature,  and  are 
therefore  not  assignable  without  the  consent  of  the  insurer.271  A 
transfer  of  the  insured  property  does  not  of  itself  effect  an  assign- 
ment of  the  policy.272  The  clause  does  not  apply  to  a  deposit  by  way 
of  pledge  which  gives  a  creditor  a  lien  upon  the  proceeds.273  An 
equitable  assignment  of  the  insured's  interest  in  the  policy  will  not 
defeat  the  insurance  under  this  general  clause.274  Where  the  policy 
is  assigned  with  the  consent  of  the  company,  and  the  property  is 
transferred  to  the  assignee,  a  new  contract  is  created  between  such 
assignee  and  the  insurance  company,  which  is  not  affected  by  sub- 
sequent breaches  of  conditions  of  the  policy  by  the  assignor.275  But 
it  is  otherwise  where  the  policy  is  merely  assigned  as  collateral  secur- 
ity, as  the  insurance  is  still  upon  the  interest  of  the  assignor.276  This 
is  true  where  the  policy  is  assigned  with  the  consent  of  the  company 
as  collateral  security  to  a  mortgagee,  and  unless  there  is  an  agree- 
ment to  the  contrary,277  the  policy  will  be  rendered  invalid  by  sub- 

269  Biggs   v.   North    Carolina,    etc.,         273  Ellis  v.  Kreutzinger,  27  Mo.  311, 
Ins.  Co.,  88  N.  C.  141  (1883);  Water-     72  Am.  Dec.  270  (1858). 

house  v.  Gloucester  F.  Ins.  Co.,  69  274  Bergson  v.  Builders'  Ins.  Co.,  38 

Me.  409  (1879);  Spare  v.  Home,  etc.,  Cal.  541  (1869);  Hall  v.  Dorchester, 

Ins.  Co.,  19  Fed.  14  (1884).     See  Car-  etc.,  Ins.  Co.,  Ill  Mass.  53,  15  Am.  R. 

roll  v.  Boston,  etc.,  Ins.  Co.,  8  Mass.  1  (1872). 

515  (1812);  Stolle  v.  ^Etna,  etc.,  Ins.  275  Fogg  v.  Middlesex,  etc.,  Ins.  Co., 

Co.,  10  W.  Va.  546    (1877).     An  as-  10  Gush.    (Mass.)   337    (1852);    Don- 

signment  of  a  fire  insurance  policy  nell  v.  Donnell,  86  Me.  518,  30  Atl. 

must  be  in  writing:     St.  Paul,  etc.,  67    (1894);    Bonefant   v.    American 

Ins.  Co.  v.  Brunswick  Grocery  Co.,  Ins.  Co.,  76  Mich.  653,  43  N.  W.  682 

113  Ga.  786,  39  S.  B.  483   (1901).  (1889);  Cummings  v.  Cheshire,  etc., 

270  Lazarus  v.  Commonwealth  Ins.  Ins.    Co.,    55    N.    H.    457     (1875); 
Co.,  5  Pick.  (Mass.)  76  (1827).  Buckley  v.  Garrett,  47  Pa.   St.   204 

^Rayner  v.  Preston,  L.  R.  18  Ch.  (1864);   Commonwealth  v.  National 

Div.  1   (1881);  Simeral  v.  Dubuque,  Ins.  Co.,  113  Mass.  514  (1873);  Ellis 

etc.,  Ins.  Co.,  18  Iowa  319    (1865);  v.  Insurance  Co.,  32  Fed.  646  (1887). 

Jecko  v.  St.  Louis,  etc.,  Ins.  Co.,  7  *"  Birdsey  v.  City  F.  Ins.  Co.,  26 

Mo.  App.  308  (1879);  Lett  v.  Guard-  Conn.  165  (1857);  Pupke  v.  Resolute 

ian  F.  Ins.  Co.,  125  N.  Y.  82,  25  N.  E.  F.  Ins.  Co.,  17  Wis.  378,  84  Am.  Dec. 

1088  (1890).  754    (1863);   Reed  v.  Windsor,  etc., 

272  Lett  v.  Guardian  F.  Ins.  Co.,  125  Ins.  Co.,  54  Vt.  413  (1882). 

N.  Y.  82,  25  N.  E.  1088  (1890).  m  Hartford    F.    Ins.    Co.    v.    Wil- 
liams, 63  Fed.  925   (1894). 


§    282  THE    STANDARD    POLICY.  276 

sequent  breaches  of  condition  by  the  assignor.278  Where  a  mort- 
gagee to  whom  such  an  assignment  is  made  assumes  the  payment  of 
future  premiums  the  transaction  will  be  construed  so  as  to  protect 
him  from  the  results  of  future  breaches  of  conditions  by  the  as- 
signor.279 But  the  assignee  takes  subject  to  the  conditions  of  the 
policy,  and  if  the  assignor  has  lost  his  right  to  recover  thereon  by 
reason  of  a  breach  of  condition,  he  can  transfer  nothing  to  the  as- 
signee.280 

This  clause  does  not  affect  the  right  of  the  insured  to  transfer 
his  interest  after  a  loss.281  It  is,  then,  a  mere  chose  in  action,  and  is 
assignable  like  any  other  claim,  without  the  consent  of  the  company, 
subject,  of  course,  to  such  defenses  as  would  have  been  available 
against  the  original  insured.282  The  transfer  and  assignment  of  a 
claim  after  loss  is  not  void  as  against  public  policy.283  An  executory 
contract  for  the  sale  of  property  does  not  violate  the  provision  against 
sale  or  assignment.284  Nor  is  it  violated  by  a  transfer  of  an  interest 
in  the  insured  property  from  one  partner  to  another.285  This  pro- 
vision does  not  apply  to  the  assignment  of  the  interest  of  a  mort- 
gagee to  whom  the  policy  is  made  payable  as  his  interest  may  ap- 
pear. Where  this  was  done  the  court  said:286  "The  object  of  that 
provision  (coupled  with  the  provision  declaring  the  policy  void  if 
the  property  insured  is  sold)  is  to  prevent  the  company  becoming 

278  Illinois,  etc.,  Ins.  Co.  v.  Fix,  53  111    Mass.    53    (1872);    Imperial    P. 

111.  151,  5  Am.  Rep.  38  (1870);  Tom-  Ins.  Co.  v.  Dunham,  117  Pa.  St.  460 

linson  v.  Monmouth,  etc.,   Ins.   Co.,  (1888). 

47  Me.  232  (1859);  Grosvenor  v.  At-  282  Imperial  F.  Ins.  Co.  v.  Dunham, 

lantic    F.    Ins.    Co.,    17    N.    Y.    391  117    Pa.    St.    460    (1888);    Dogge   v. 

(1858).  Northwestern,  etc.,  Ins.  Co.,  49  Wis. 

""Francis  v.  Butler,  etc.,  Ins.  Co.,  501   (1880). 

7  R.  I.  159  (1862);  Brannin  v.  Mer-  283Goit  v.  National,  etc.,  Ins.  Co., 

cer,  etc.,  Ins.,  28  N.  J.  L.  92  (1859).  25  Barb.    (N.  Y.)   189    (1855);   West 

280  Home,  etc.,  Ins.  Co.  v.  Hauslein,  Branch   Ins.  Co.  v.  Helfenstein,  40 

60  111.  521   (1871);  Eastman  v.  Car-  Pa.  St.  289,  80  Am.  Dec.  573  (1861); 

rol,  etc.,  Ins.  Co.,  45  Me.  307  (1858);  Alkan  v.  New  Hampshire  Ins.  Co., 

Citizens',  etc.,   Ins.   Co.   v.   Doll,   35  53  Wis.  136  (1881). 

Md.  89,  6  Am.  Rep.  360   (1871).     In  284  Washington,    etc.,    Ins.    Co.    v. 

Ellis  v.  Council  Bluffs  Ins.  Co.,   64  Kelly,  32  Md.  421,  3  Am.  Rep.  149 

Iowa  507    (1884),  it  was  held  that  (1870). 

by  consenting  to  an  assignment  the  285  Hoffman  v.  JEtna  F.  Ins.  Co.,  32 

company,   as   against   the   assignee,  N.  Y.  405   (1865);  West  v.  Citizens' 

could  not  defend  on  the  ground  of  Ins.  Co.,  27  Ohio  St.  1,  22  Am.  Rep. 

the  fraud  of  the  assignor  in  obtain-  294  (1875). 

ing  the  insurance.  288  Whiting  v.  Burkhardt   (Mass.), 

181  Hall  v.  Dorcester,  etc.,  Ins.  Co.,  60  N.  E.  1  (1901). 


277  ASSIGNMENT.  \_ 

the  insurer  of  property  of  a  person  who  is  not  acceptable  to  it.  An 
insurance  company  has  the  right  to  refuse  to  insure  a  person  whose 
character  is  such  that  the  moral  risk,  to  use  the  term  employed  in 
the  insurance  business,  is  greater  than  it  is  where  the  same  property 
is  owned  by  an  honest  man,  and  is  one  which  they  do  not  care  to 
assume.  The  transfer  prohibited  by  this  provision  is  a  transfer  of 
the  contract  of  insurance, — that  is  to  say,  a  transfer  by 
the  persons  insured,  not  a  transfer  by  J.,  who  was  the  person ,  desig- 
nated as  the  person  entitled  to  receive  the  proceeds  of  the  insurance, 
if  any,  due  under  the  contract  between  the  company  on  the  one 
hand  and  the  insured  on  the  other.  *  *  *  What  J.  did  by 
assigning  his  'right  and  interest  in  this  policy'  was  not  to  transfer 
the  policy,  but  to  assign  to  another  his  right  to  receive  the  proceeds, 
if  any,  under  it,  the  policy  remaining,  after  this  assignment,  as  before, 
the  policy  of  G." 

A  policy  was  made  payable  to  a  mortgagee,  and  provided  that  no 
act  or  default  of  any  person  but  the  mortgagee,  his  agents  or  those 
claiming  under  him,  should  affect  his  right  to  recover  in  case  of 
loss ;  and  it  was  held  that  the  assignee  of  such  mortgagee  might  recover 
on  the  policy,  although'  a  part  owner  of  the  property  had  sold  his 
interest  therein  before  loss,  and  that  the  provision  against  assign- 
ment did  not  apply  to  an  assignment  by  such  mortgagee.287  The 
assent  of  the  company  to  an  assignment  of  the  policy  may  be  given 
after  an  unauthorized  assignment  as  well  as  before.288  Where  a 
policy  which  had  been  assigned  was  presented  to  the  agent  of  the 
company  for  the  purpose  of  having  its  consent  indorsed  thereon, 
and  the  agent,  instead  of  making  this  indorsement,  signed  and  at- 
tached to  the  policy  a  slip  which  provided  that  loss,  if  any,  there- 
under, should  be  payable  to  the  assignee,  as  his  interest  might  ap- 
pear, it  was  held  that  there  was  a  substantial  consent  to  the  assign- 
ment.289 Where,  at  the  instance  of  the  insured,  an  entry  was  made 
in  the  policy  register  of  the  company,  "transferred  to  G-.,"  it  was 
held  sufficient  to  show  acceptance  by  the  company  of  G.  instead  of  the 
original  insured.290  It  has  been  held  that  an.  indorsement,  "in  case 

287  Whiting  v.  Burkhardt   (Mass.),  289  Queen  Ins.  Co.  v.  Block   (Ky), 
60  N.  B.  1  (1901).  58    S.    W.    471    (1900).      See,    also, 

288  Gould   v.   Dwelling   House   Ins.  Southern   Fertilizer   Co.   v.   Reams, 
Co.,  134  Pa.  St.  570,  19  Atl.  793,  19  105  N.  C.  283,  11  S.  E.  467   (1890); 
Am.    St.    717    (1890);    Shearman   v.  Buchanan  v.  Exchange  F.  Ins.  Co., 
Niagara   F.   Ins.  Co.,   46   N.   Y.   526  61  N.  Y.  26  (1874). 

(1871).  2M  Griswold  v.  American,  etc.,  Ins. 


§    282  THE    STANDARD   POLICY.  278 

of  loss,  pay  to  A./'  is  not  an  assignment  of  the  policy.291  Generally 
the  insertion  of  a  clause  in  the  policy  making  the  loss  payable  to  a 
third  party  does  not  operate  as  an  assignment  of  the  policy.292  Thus, 
where  the  policy  is  payable  to  a  mortgagee  as  his  interest  may  appear, 
there  is  no  assignment  of  the  policy  by  a  mere  designation  of  one 
to  whom  the  fund,  or  a  portion  thereof,  is  to  be  paid  with  the  com- 
pany's consent.  The  right  of  action  is  still  in  the  original  insured.293 
A  mortgagee  to  whom  a  policy  is  made  payable  as  his  interest  may  ap- 
pear need  not  obtain  the  further  consent  of  the  company  as  upon  a 
formal  assignment  of  the  policy.294  An  unsuccessful  attempt  to  as- 
sign the  policy  where  the  interest  in  the  insured  property  is  not 
transferred  will  not  render  the  policy  void  under  this  provision.295 
The  consent  to  an  assignment  may  be  given  by  any  duly  authorized 
agent  of  the  company.296  No  one  but  the  company  can  object  to  an 
assignment  of  the  policy.297 

X.     Prohibited  Articles. 

This  entire  policy  shall  be  void  *  *  *  if  (any  usage  or  custom 
of  trade  or  manufacture  to  the  contrary  notwithstanding)  there  be 
kept,  used,  or  allowed  on  the  above  described  premises,  benzine,  ben- 
zole, dynamite,  ether,  fireworks,  gasoline,  greek  fire,  gunpowder  ex- 
ceeding twenty-five  'pounds  in  quantity,  naphtha,  nitroglycerine,  or 

Co.,   70   Mo.   654    (1879).      See  Min-  -•>*  Smith   v.    Monmouth,   etc.,    Ins. 

turn  v.  Manufacturers'  Ins.  Co.,  10  Co.,  50  Me.  96  (1863).     In  Bursinger 

Gray  (Mass.)  501  (1858).    As  to  the  v.  Watertown  Bank,  67  Wis.  75,  58 

meaning  of  "indorsement"  when  re-  Am.   Rep.   848    (1886),   it   appeared 

quired  to  he  on  the  policy,  see  Penn-  that  the  insured  attempted  to  assign 

sylvania    Ins.    Co.    v.    Bowman,    44  the  policy  while  intoxicated. 

Pa.  St.  89  (1862);  Reynolds  v.  Atlas,  ^  Breckinridge  v.  American,  etc., 

etc.,  Ins.  Co.,  69  Minn.  93,  71  N.  W.  Ins.  Co.,  87  Mo.  62  (1885);  Imperial 

831  (1897).  F.  Ins.  Co.  v.  Dunham,  117  Pa.  St. 

^Russ  v.  Waldo,  etc.,  Ins.  Co.,  52  460,  12  Atl.  668  (1888).     As  to  man- 

Me.  187  (1863).  ner  in  which  assent  may  be  made, 

292  Martin  v.  Franklin  F.  Ins.  Co.,  see  Durar  v.  Hudson,  etc.,  Ins.  Co., 
9Vroom  (N.  J.)  140  (1875);  Froehly  24  N.  J.  L.  171    (1853);   Boynton  v. 
v.  North  St.  Louis,  etc.,  Ins.  Co.,  32  Farmers',  etc.,  Ins.  Co.,  43  Vt.  256,  5 
Mo.  App.  302  (1888).  Am.  Rep.  276  (1870);  Grant  v.  Eliot, 

293  Williamson    v.    Michigan,    etc.,  etc.,  Ins.  Co.,  75  Me.  196  (1883). 
Ins.  Co.,  86  Wis.  393,  39  Am.  St.  906  29T  Leinkauf  v.  Caiman,  110  N.  Y. 
(1893).  50  (1888). 

294  National  F.  Ins.  Co.  v.  Crane,  16 
Md.  260,  77  Am.  Dec.  289  (1860). 


279  PROHIBITED   ARTICLES.  §    283 

oilier  explosives,  phosphorus,  or  petroleum  or  any  of  its  products  of 
greater  inflammability  than  kerosene  oil  of  the  United  States  standard 
( irhich  last  may  be  used  for  lights  and  kept  for  sale  according  to  law, 
but  in  quantities  not  exceeding  five  barrels,  provided  it  be  drawn  and 
lamps  filled  by  daylight  or  at  a  distance  not  less  than  ten  feet  from 
artificial  light)2™ 

§  283.  TJse  of  property — Prohibited  articles. — This  section  con- 
tains a  proper  restriction  upon  the  use  of  the  property,  and  must  be 
observed  by  the  insured.299  The  language,  "any  use  or  custom  of 
trade  or  manufacture  to  the  contrary"  was  inserted  in  the  standard 
form  for  the  purpose  of  avoiding  the  rule  of  construction  which 
permits  the  use  of  the  articles  named  in  the  printed  slip,  where  they 
constitute  an  ordinary  part  of  the  stock  of  goods  described  in  the 
policy  or  are  necessary  and  commonly  used  as  incident  to  the  busi- 
ness. But  the  rule  still  prevails,  and  the  only  effect  of  the  clause  is 
"to  impose  on  the  insured  the  burden  of  showing  with  perhaps 
greater  clearness  that  the  written  description  clearly  covers  the  pro- 
hibited articles  in  question."300 

Operating  a  laundry  is  not  a  trade  or  manufacture  within  this 

298  This    clause    is    found    in    the  may  be  used  for  domestic  purposes 

standard    policies    in    use    in    the  to  be  filled  when  cold  by  daylight, 

states   of   New   York,    New    Jersey,  and   with  oil  of  lawful  test  only." 

Connecticut,   Rhode    Island,    Louisi-  The  New  Hampshire  clause  makes 

ana,   North   Dakota,   South   Dakota,  no  reference  to  the  use  of  kerosene 

Michigan,  North  Carolina,  and  Iowa,  oil    stoves    for    domestic    purposes, 

Wisconsin     substitutes    the     words  otherwise  it  is  the  same  as  the  pre- 

"Wisconsin    standard"    for    "United  ceding  clause. 

States  standard"  in  referring  to  ker-  2"  United,   etc.,   Ins.  Co.  v.   Foote, 

osene  oil.    Massachusetts,  Maine  and  22   Ohio   St.    340,   10   Am.   Rep.   735 

Minnesota  have  the  following  clause  (1872);    Liverpool,  etc.,   Ins.  Co.  v. 

in  their  standard  policies:      "Or  if  Gunther,  116  U.  S.  113    (1885).     In 

gunpowder  or  other  articles  subject  Yoch  v.  Home,  etc.,  Ins.  Co.,  Ill  Cal. 

to   legal   restrictions   shall   be  kept  503,  44  Pac.  189  (1896),  it  was  held 

in    quantities    or    manner    different  that  "an  agreement  indorsed"   per- 

from  those  allowed  or  prescribed  by  mitting    otherwise    prohibited    arti- 

law,  or  if  camphine,  benzine,  naph-  cles  to  be  kept  on  the  insured  prem- 

tha  or  other  chemical  oils  or  burn-  ises  is  made  where  the  articles  are 

ing  fluids  shall  be  kept  or  used  by  included  in  the  written  description 

the  insured  on  the  premises  insured,  of  the  insured  property, 

except  that  what  is  known   as   re-  30°  Richards  Ins.,   §  149;    Birming- 

fined  petroleum,  kerosene  or  coal  oil,  ham  F.  Ins.  Co.  v.  Kroegher,  83  Pa. 

may  be   used   for   lighting,   and   in  St.  64,  24  Am.  Rep.  147  (1876). 
dwelling  houses  kerosene  oil  stoves 


§    283  THE    STANDARD    POLICY.  280 

clause  so  as  to  preclude  proof  of  a  custom  of  using  gasoline  by  the 
residents  of  a  community  at  the  time  the  policy  was  issued.301  The 
general  rule  of  construction  is  that  the  written  part  of  a  contract 
will  prevail  over  what  is  printed ;  and  therefore,  where  the  writing  de- 
scribes a  certain  kind  or  stock  of  goods  or  property  used  in  a  certain 
business  it  is  presumed  that  the  intention  was  to  insure  all  that  is 
commonly  carried  in  such  a  stock,  and  to  permit  the  property  to  be 
used  in  the  ordinary  and  customary  way.  Hence,  a  policy  covering 
materials  of  a  certain  business,  which  contained  a  printed  condition 
prohibiting  the  keeping  or  using  of  certain  inflammable  substances,  is 
valid  where  the  business  is  of  such  a  character  that  the  substances 
constitute  a  component  part  of  the  stock  of  materials  used  in  the 
business.  In  a  case  where  the  question  received  full  consideration 
it  was  said:302  "The  contrary  doctrine  would  present  the  strange 
anomaty  of  issuing  a  polic}r  of  insurance  containing  such  conditions 
that  under  no  circumstances  could  payment  of  the  loss  thereunder 
be  legally  demanded.  A  rule  which  permitted  the  printed  con- 
ditions to  control  the  written  statement  of  the  subject  on  which  the 
insurance  was  issued  would  place  the  insurance  company  in  the  pe- 
culiar position  of  saying  in  effect :  'I  issue  you  this  policy ;  I  accept 
your  money  in  satisfaction  of  my  demands  for  premiums;  I  insure 
your  property  to  be  used  in  your  business,  but  if  you  use  it  your  policy 
is  void/  " 

Where  the  policy  covered  property  described  as  a  stock  such  as  is 
usually  kept  in  a  general  retail  store,  and  the  keeping  of  gunpowder 
was  prohibited  by  the  printed  portions  of  the  policy,  it  was  held  that  if 
the  gunpowder  was  a  part  of  the  stock  usually  kept  in  a  retail  store 
it  might  be  kept  without  violating  the  condition  of  the  policy.303 
So,  a  policy  insuring  a  stock  of  hardware  provided  that  the  keeping 
or  using  or  allowing  of  dynamite  on  the  premises  would  render  the 
policy  void  unless  otherwise  provided  by  agreement  on  the  policy. 

301  Northern   Assur.   Co.    v.    Craw-     by   an   indulgent   but  apprehensive 
ford  (Tex.  Civ.  App.),  59  S.  W.  916     matron  to  her  daughter: 

(1900).  "'Mother,  may  I  go  out  to  swim?' 

302  Maril  v.  Connecticut  F.  Ins.  Co.,  'Yes,  my  darling  daughter; 

95  Ga.  604,  51  Am.  St.  102  (1895).  Hang  your  clothes  on  a  hickory 
In  this  case  the  learned  judge  sug-  limb, 

gests  that  the  doctrine  asserted  by  But  don't  go  near  the  water.' " 

the  insurance  company  is  well  illus-  303  Peoria,  etc.,  Ins.  Co.  v.  Hall,  12 
trated  by  the  poetical  advice  offered  Mich.  202  (1864);  Pindar  v.  Kings, 

etc.,  Ins.  Co.,  36  N.  Y.  648  (1867). 


281  PROHIBITED    ARTICLES.  §    283 

An  attached  slip  provided  that  the  insurance  should  cover  merchan- 
dise usually  kept  for  sale  in  a  hardware  store,  and  it  was  held  that 
the  policy  covered  dynamite  when  it  was  shown  that  it  was  usual 
to  keep  dynamite  in  such  stores.304 

So,  where  the  policy  covered  a  stock  of  goods  such  as  is  usually 
kept  in  country  stores,  and  contained  a  printed  condition  that  it 
should  be  void  if  certain  articles,  including  gasoline,  were  kept,  used, 
or  allowed  on  the  premises,  it  was  held  valid,  where  gasoline  was 
kept  as  a  part  of  the  usual  stock  of  merchandise.  After  discussing 
the  various  rules,  the  court  said:  "Applying  these  rules  to  the  con- 
tract in  the  present  case,  it  must  be  held  that  it  was  the  intention 
of  the  defendant  to  insure  gasoline  if  it  was  an  article  usually  kept 
in  country  stores,  and  that  if  such  was  its  intention,  it  was  no  viola- 
tion of  the  policy  that  the  insured  did  keep  gasoline  on  the  premises 
as  a  part  of  the  stock  of  merchandise."305 

Benzine  kept  in  small  quantities  as  part  of  a  stock  of  drugs  and 
chemicals  does  not  avoid  a  policy  on  such  stock,  although  there  is 
a  stipulation  against  the  keeping  of  benzine  in  the  store.  "The 
court  will  not  presume  that  the  parties  intended  to  make  such  an 
absolute  agreement,  but  in  such  cases  will  presume  that  the  intention 
was  that  the  printed  portions  of  the  policy  forbidding  the  keeping 
of  benzine  should  not  apply  to  the  keeping  of  it  bottled  in  small 
quantities,  as  customary  with  druggists,  but  only  to  storing  and 
keeping  it  in  large  quantities."306 

An  insurance  company  must  be  presumed  to  be  familiar  with  the 
materials  necessary  to  carry  on  a  trade  or  business  and  to  know  what 
is  commonly  included  in  a  stock  of  goods  such  as  that  insured,  and 
in  issuing  the  policy  it  must  be  deemed  to  have  intended  to  include 
all  such  materials  in  the  risk.307  Hence,  where  the  policy  was  issued 
upon  the  materials  used  in  the  business  of  photography,  it  was  held 
to  cover  all  such  articles,  such  as  kerosene,  as  were  in  common  use, 
although  some  other  things  might  have  been  substituted  therefor.3.08 
A  policy  upon  a  stock  of  fancy  goods,  toys  and  other  articles  used 

304  Phenix  Ins.  Co.  v.  Walters,  24  SOT  Lancaster   P.    Ins.   Co.   v.   Len- 
Ind.  App.  87,  56  N.  E.  257    (1900),  heim,   89  Pa.   St.   497,  33  Am.  Rep. 
citing  many  cases.  778  (1879),  annotated. 

305  Yoch  v.  Home,  etc.,  Ins.  Co.,  Ill  30S  Hall  v.  Insurance  Co.,  58  N.  Y. 
Cal.  503,  34  L.  R.  A.  857  (1896).  292,  17  Am.  Rep.  255  (1874);  Amer- 

306  Phoenix   Ins.   Co.  v.   Flemming,  ican,  etc.,  Ins.  Co.  v.  Green,  16  Tex. 
65  Ark.  54,  39  L.  R.  A.  789  (1898).  Civ.  App.  531,  41  S.  W.  74  (1897). 


§    283  THE    STANDARD   POLICY.  282 

in  the  business  of  the  defendant  as  a  German  jobber  and  importer, 
with  the  privilege  of  keeping  fireworks,  which,  contained  a  pro- 
vision requiring  hazardous  articles,  such  as  fireworks,  if  kept,  to  be 
specially  written  in  the  policy,  is  avoided  by  the  storing  of  fireworks 
on  the  premises  without  such  permission.  Where  a  dealer  was  permit- 
ted to  keep  firecrackers,  it  was  held  not  to  include  fireworks;  nor 
were  they  within  the  phrase,  "other  articles  in  his  line  of  business," 
in  view  of  the  express  provisions  of  the  policy.309 

The  use  of  an  inflammable  substance,  which  is  a  necessary,  usual 
and  customary  incident  to  the  business  in  which  the  insured  property 
is  used,  will  be  held  to  have  been  within  the  contemplation  of  the 
parties  at  the  time  of  issuing  the  policy.310  Where  the  printed  con- 
ditions exempt  the  insurer  from  liability  for  loss  occasioned  by  the 
use  of  camphine,  and  there  was  a  written  provision  granting  the  privi- 
lege for  a  printing  office,  bindery,  bookstore  and  steam  boiler  in  the 
yard,  it  was  held  that  the  use  of  camphine  as  one  of  the  necessary 
articles  for  use  in  a  printing  office  did  not  invalidate  the  policy.311 

The  provision  will  be  given  a  liberal  construction  where  the  pro- 
hibited articles  are  used  incidentally  and  for  temporary  purposes 
only,  such  as  for  cleaning  machinery.312  It  is  not  broken  by  the  keep- 
ing in  a  store  of  a  jug  containing  crude  petroleum,  which  is  used  by 
the  insured  for  medicinal  purposes,  if  the  risk  is  not  thereby  increased, 
and  this  is  a  question  for  the  jury.313  Gasoline  is  not  kept,  used, 
or  allowed  on  the  premises  within  the  meaning  of  the  policy  by 
leaving  a  five-gallon  can  containing  gasoline  in  a  building  for  a 
number  of  days  for  use  in  burning  off  paint  preparatory  to  painting 
the  building.  The  prohibition  refers  to  the  habitual  keeping,  using 
or  allowing  of  any  of  these  articles  on  the  premises,  and  not  to  the  cas- 
ual introduction  of  the  articles  for  some  temporary  purpose  con- 
nected with  their  occupation.314  So,  there  is  no  breach  of  the  condi- 

309  Steinbach  v.  Relief  F.  Ins.  Co.,  3n  Harper  v.  New  York,  etc.,  Ins. 
13    Wall.     (U.    S.)    183     (1871).      In  Co.,  22  N.  Y.  441  (1860). 
Steinbach  v.  Lafayette  F.  Ins.  Co.,  312  Wheeler  v.  Traders'  Ins.  Co.,  62 
54  N.  Y.  90   (1873),  upon  the  same  N.   H.   450,   13   Am.   St.   582    (1883), 
facts,  it  was  held  that  if,  as  a  matter  note. 

of  fact,  the  keeping  of  fireworks  was  313  Williams  v.  People's  F.  Ins.  Co., 

in   the   plaintiff's   line   of   business,  57  N.  Y.  274  (1874). 

they  were  embraced  in  the  descrip-  314  Smith  v.  German  Ins.  Co.,  107 

tion  of  the  property  covered  by  the  Mich.   270,  30  L.  R.  A.  368    (1895). 

policy.  Contra,   see  First  Cong.   Church  v. 

310  Maril  v.  Connecticut  F.  Ins.  Co.,  Holyoke,  etc.,  Ins.  Co.,  158  Mass.  475, 
95  Ga.  604,  30  L.  R.  A.  835   (1894).  33  N.  E.  572,  35  Am.  St.  508,  19  L.  R. 


283  PROHIBITED   ARTICLES.  §    284 

tion  where  the  policy  prohibits  the  use  of  camphine,  spirit  gas,  burn- 
ing fluid,  or  chemical  oils,  but  permits  the  use  of  refined  coal  oil,  kero- 
sene or  other  carbon  oils  for  lights,  if  drawn  and  the  lamps  filled  by 
daylight,  and  the  insured  uses  lard  oil  and  candles  for  lights  and  filled 
the  lamps  at  night.315 

§  284.  Prohibited  articles,  continued. — A  much  narrower  rule  of 
construction  than  that  stated  in  the  preceding  section  is  adopted 
in  some  states.  Thus,  in  New  Hampshire,  a  violation  of  the  provision 
against  the  keeping  and  use  of  benzine  and  other  enumerated  articles 
of  similar  character  was  held  to  render  the  policy  void.  The  court 
said:  "Cases  in  which  a  disregard  of  the  prohibition  of  the  keeping 
or  using  of  extraordinarily  hazardous  articles  has  not  been  held  to 
work  a  forfeiture  of  the  policy,  are  those  where  the  use  made  was  one 
incident  to  the  business  of  the  insured,  adopted  from  necessity  or  cus- 
tom, and  recognized  by  the  insurer  so  that  a  waiver  of  the  prohibitory 
clause  followed."  In  reference  to  the  claim  that  the  provision  was 
not  violated  because  the  use  was  merely  temporary,  the  court  said: 
"The  cases  relied  on  as  authority  for  this  position  are  cases  for  the 
most  part  where  there  was  no  express  stipulation  or  warranty  against 
the  use  of  the  particular  dangerous  article  or  material  in  question, 
but  only  a  provision  in  general  terms  against  the  keeping  of  hazard- 
ous things  on  the  premises,  or  of  carrying  on  a  different  or  more 
dangerous  trade.  But  where  there  is  a  stipulation  that  the  policy 
shall  be  avoided  on  the  use  of  the  article  expressly  named,  and  there  is 
nothing  in  the  policy  from  which  permission  to  use  the  article  in 
a  limited,  partial  or  temporary  way  can  be  inferred,  full  effect  is 
usually  given  to  the  prohibitive  clause  by  a  forfeiture  of  the  policy  for 
its  violation."'316 

So,  in  Pennsylvania,  under  a  policy  which  provided  that  it  should 
be  void  if  the  hazard  be  increased  by  any  means  within  the  control  or 
knowledge  of  the  insured,  or  if  there  be  kept,  used  or  allowed  on  the 
premises  fireworks  or  other  named  explosives,  it  was  held  that  the 
temporary  storing  of  an  assorted  lot  of  fireworks  upon  the  premises 

A.   587    (1893),   where   it  was  held  Compare   Wheeler  v.   Traders'    Ins. 

that  the  policy  was  avoided  by  the  Co.,  62  N.   H.  450,  13  Am.  St.   582 

use  of  a  naphtha  torch  for  burning  (1883). 

off  old  paint  on  the  building.  31°  Wheeler   v.    Traders'    Ins.    Co., 

315  Carlin   v.   Western   Assur.    Co.,  62  N.  H.  450,  Woodruff  Ins.  Gas.  162 

57  Md.  515,  40  Am.  Rep.  440  (1881).  (1883). 


§    285  THE    STANDARD    POLICY.  284 

for  celebration  purposes,  with  the  knowledge  and  consent  of  the  in- 
sured, was  a  breach  of  the  condition  and  prevented  a  recovery  for 
loss  arising  from  the  accidental  explosion  of  such  fireworks.  The 
court  said:  "We  have  never  gone  to  the  length  that  other  courts 
have  in  construing  away  express  provisions  or  stipulations  as  to  for- 
feiture. While  some  hold  that  it  is  permissible  to  use  the  articles 
prohibited  by  the  general  printed  clause,  provided  they  are  such  as 
naturally  appertain  to  the  stock  of  goods  or  property  described  in 
the  written  part  of  the  policy,  this  court  has  refused  to  go  so 
far."317 

But  even  in  Pennsylvania  it  has  been  held  that  where  the  use  of  the 
prohibited  article  is  a  necessary  one  in  connection  with  the  business, 
it  must  be  presumed  that  the  intent  of  the  parties  was  to  insure  the 
subject  of  the  insurance  as  it  would  continue  to  be  during  the  life 
of  the  policy,  notwithstanding  the  printed  provision.318 

§  285.  Exception  in  favor  of  kerosene  oil. — "Kerosene  oil  of  the 
United  States  standard  may  be  used  for  lights  and  kept  for  sale 
according  to  law,  but  in  quantities  not  exceeding  five  barrels,  pro- 
vided that  it  be  drawn  and  lamps  filled  by  daylight  at  a  distance 
not  less  than  ten  feet  from  artificial  light."319  The  policy  is  not 
avoided  by  the  use  of  kerosene  oil  otherwise  than  in  lamps  for  illu- 
minating purposes  where  the  policy  provides  that  "kerosene  oil  of  the 

317  Heron  v.  Phoenix  Ins.  Co.,  180  of  New  York,  New  Jersey,  Connecti- 
Pa.  St.  257,  57  Am.  St.  638    (1897),  cut,  Rhode  Island,  Louisiana,  North 
reviewing   Pennsylvania   cases.     In  Dakota,    South    Dakota,    Michigan, 
this  case  fireworks  were  placed  in  North  Carolina,  and  Iowa.    Wiscon- 
the   parlor   of   a   residence   on    the  sin  substitutes  the  words  "Wiscon- 
third   of   July   for   the   purpose   of  sin    standard"    for    "United    States 
using  them  in  a  celebration  on  the  standard."    The  standard  policies  of 
evening  of  the  fourth,  and  the  policy  Massachusetts,  Minnesota  and  Maine 
contained   a   clause   that  it   should  provide  that:    "Kerosene  or  coal  oil 
be  void  if  fireworks  or  other  such  may   be   used   for   lighting,   and   in 
articles  "were  kept,  used,  or  allowed  dwelling  houses  oil  stoves  may  be 
on  the  premises,  any  usage  or  cus-  used   for   domestic   purposes,   to   be 
torn  of  trade  or  manufacture  to  the  filled   when   cold   by   daylight,   and 
contrary  notwithstanding."  with  oil  of  lawful  test  only."     The 

318  Fraim  v.  National  F.  Ins.  Co.,  New  Hampshire  policy  makes  no  ref- 
170    Pa.    St.    151,    50    Am.    St.    753  erence  to  the  use   of  kerosene  for 
(1895).  domestic  purposes;    otherwise  it  is 

319  This  provision  is  found  in  the  the  same  as  the  Massachusetts,  Min- 
standard  policies  in  use  in  the  states  nesota  and  Maine  policies. 


285 


VACANCY. 


286 


legal  standard  may  be  used  for  lights  only,  provided  the  oil  be 
drawn  and  the  lamps  filled  and  trimmed  solely  by  daylight/'  as 
this  restriction  is  merely  a  regulation  of  the  use  of  kerosene  when 
used  for  lighting  purposes,  and  will  not  be  construed  to  prohibit  its 
use  for  any  other  purpose  than  for  lights.320 


XI.     Vacancy. 

This  entire  policy  shall  be  void  *  *  *  if  a  building  herein 
described,  whether  intended  for  occupancy  by  owner  or  tenant.,  be  or 
become  vacant  or  unoccupied  and  so  remain  for  ten  days.321 

§  286.  In  general. — The  standard  form  permits  the  insured  prem- 
ises to  become  vacant  for  ten  days  or  less  without  notice  to  the  in- 
surer. The  question  of  the  effect  of  a  temporary  vacancy  is  thus  elim- 
inated. A  vacancy  beyond  the  prescribed  period  is  a  breach  of  the 
condition.322  Under  a  general  provision  rendering  a  policy  void  if 
the  insured  buildings  become  vacant  and  unoccupied,  it  is  held  by  the 
weight  of  authority  that  a  mere  temporary  vacancy  will  not  affect  a 
recovery,323  although  there  are  authorities  to  the  contrary.  Thus, 


320  Snyder  v.  Dwelling  House  Ins. 
Co.,  59  N.  J.  L.  544,  59  Am.  St.  625 
(1896).     The   New   York   court   de- 
clined, in  view  of  the  fact  that  the 
legislature     has     declared     certain 
grades    and    qualities    of    kerosene 
proper  and  safe  to  use,  to  take  ju- 
dicial notice  of  the  explosive  quali- 
ties of  kerosene.    It  was  incumbent 
on  the  defendant  to  show  that  the 
kerosene  used   was  in  fact  inflam- 
mable:     Wood    v.    North    Western 
Ins.  Co.,  46  N.  Y.  421   (1871).     See, 
also,  Mears  v.  Humboldt  Ins.  Co.,  92 
Pa.  St.  1  (1879). 

321  This  provision  is  found  in  the 
standard  policies  of  New  York,  New 
Jersey,  Connecticut,  North  Carolina, 
Rhode  Island,  Wisconsin,  Louisiana, 
Michigan,  North  Dakota,  and  South 
Dakota.    The  Iowa  clause  reads,  "or 
if     a     building     herein     described, 
whether  intended  for  occupancy  by 
the  owner  or  tenant,  be  or  become 
vacant    or    unoccupied,    or    if    the 


premium  be  not  paid  when  due." 
The  standard  policies  of  Massachu- 
setts, Minnesota,,  Maine,  and  New 
Hampshire  read,  "or  if  the  premises 
hereby  insured  shall  become  vacant 
by  the  removal  of  the  owner  or  oc- 
cupant, and'  so  remain  vacant  for 
more  than  thirty  days  without  per- 
mission in  writing  indorsed  hereon." 

322  Thompson  v.  Caledonia  F.  Ins. 
Co.,    92    Wis.    664,    66    N.    W.    801 
(1896);  Burner  v.  German,  etc.,  Ins. 
Co.,    20    Ky.    L.    71,    45    S.    W.    109 
(1898).     As   to   statutory   provision 
that  vacancy  will  avoid  the  policy 
only  when  there  is  an  increase  of 
risk,  see  Moody  v.  Amazon  Ins.  Co., 
52  Ohio  St.  12,  38  N.  E.  1011,  26  L. 
R.  A.  313,  49  Am.  St.  699  (1894). 

323  Liverpool,  etc.,  Ins.  Co.  v.  Buck- 
staff,   38   Neb.   146,   41  Am.   St.   725 
(1893);  Johnson  v.  Norwalk  F.  Ins. 
Co.,    175    Mass.    529,    56    N.    E.    569 
(1900). 


§    287  THE    STANDARD    POLICY.  286 

in  Texas  it  is  held  that  where  the  policy  provides  that  if  the  buildings 
become  vacant  and  unoccupied  without  the  consent  of  the  company 
indorsed  upon  the  policy,  it  shall  be  mill  and  void,  it  is  invalidated 
by  a  temporary  vacancy  of  the  property,  although  without  the  knowl- 
edge of  the  owner,  and  a  subsequent  re-occupancy  does  not  revive  the 
policy  unless  the  forfeiture  has  been  waived  by  the  insurer.324  It  has 
been  held  that  a  reasonable  time  elapsing  between  a  change  of  tenants 
does  not  render  the  policy  void  under  this  clause.325  Vacancy  of  the 
house  alone  does  not  avoid  the  policy  where  it  prohibits  vacancy  of 
the  premises  and  covers  both  a  house  and  a  barn.326 

§  287.  Construction. — This  condition  against  a  building  becoming 
vacant  or  unoccupied  must  be  construed  in  the  light  of  the  situation 
and  character  of  the  property  and  the  ordinary  incidents  and  contin- 
gencies affecting  the  use  to  which  it  and  other  property  of  similar 
character  in  the  same  use  is  subject.327  In  construing  the  provision 
the  Supreme  Court  of  Wisconsin  said:328  "Under  certain  circum- 
stances premises  may  be  vacant  or  unoccupied  when  under  other  cir- 
cumstances premises  in  like  situation  may  not  be  so  within  the 
meaning  of  that  term  in  insurance  policies.  Thus,  if  one  insures 
his  dwelling  house  described  in  the  policy  as  occupied  by  himself  as 
his  residence,  and  moves  out  of  it,  leaving  no  person  in  occupation 
thereof,  it  thereby  becomes  'vacant  or  unoccupied.'  But  if  he  in- 
sures it  as  a  tenement  house  or  as  occupied  by  a  tenant  it  may  fairly 
be  presumed,  nothing  appearing  to  the  contrary,  that  the  parties  to 

324  East  Texas  F.  Ins.  Co.  v.  Kemp-  and  note   (1878);   Carr  v.  Williams' 
ner,    87    Tex.    229,    47    Am.    St.    99  Ins.  Co.,  60  N.  H.  513  (1881). 
(1894).     Contra,   yEtna   Ins.    Co.   v.  ™8  Hotchkiss   v.    Phrenix   Ins.    Co., 
Meyers,  63  Ind.  238   (1878).  76  Wis.  269,  20  Am.  St.  69    (1890). 

325  Worley    v.    State    Ins.    Co.,    91  To  the  same  effect,  see  Lockwood  v. 
Iowa  150,  51  Am.  St.  334  (1894).  Middlesex,  etc.,  Assur.  Co.,  47  Conn. 

320  Worley  v.  State  Ins.  Co.,  91  553  (1880);  Traders',  etc.,  Ins.  Co. 

Iowa  150,  51  Am.  St.  334  (1894),  v.  Race,  142  111.  338  (1892);  Home 

commenting  on  Connecticut  F.  Ins.  Ins.  Co.  v.  Wood,  47  Kan.  521 

Co.  v.  Tilley,  88  Va.  1024,  29  Am.  St.  (1891);  Doud  v.  Citizens'  Ins.  Co., 

770  (1892).  141  Pa.  St.  47,  23  Am.  St.  263 

327  Hamburg  v.  German  F.  Ins.  Co.,  (1891);  Roe  v.  Dwelling  House  Ins. 
90  Iowa  709,  48  Am.  St.  468  (1894);  Co.,  149  Pa.  St.  94,  34  Am.  St.  595 
Continental  Ins.  Co.  v.  Kyle,  124  (1892);  City  Planing,  etc.,  Co.  v. 
Ind.  132,  19  Am.  St.  77,  and  note  Merchants',  etc.,  Ins.  Co.,  72  Mich. 
(1890);  Whitney  v.  Black  River  Ins.  654,  16  Am.  St.  552  (1888);  Gum- 
Co.,  72  N.  Y.  117,  28  Am.  Rep.  116,  mins  v.  Agricultural  Ins.  Co.,  67  N. 

Y.  260,  23  Am.  Rep.  Ill  (1876). 


287  VACANCY.  §  288 

the  contract  of  insurance  contemplated  that  the  tenant  was  liable 
to  leave  the  premises  and  that  more  or  less  time  might  elapse  before 
the  owner  could  procure  another  tenant  to  occupy  it,  and  hence 
that  the  parties  did  not  understand  that  the  house  should  be  con- 
sidered vacant  and  the  policy  forfeited  or  suspended  (according  to 
its  terms)  immediately  upon  the  tenant's  leaving  it."  The  condi- 
tion against  non-occupancy  must  therefore  be  construed  and  applied 
with  reference  to  the  subject-matter  of  the  contract,  and  the  ordinary 
incidents  attending  the  use  of  such  property.329 

§  288.  Vacant  and  unoccupied  not  synonymous. — The  word  "va- 
cant" does  not  necessarily  mean  the  same  thing  as  "unoccupied."  In 
the  New  York  standard  form  of  policy  the  words  are  connected  by  the 
conjunction  "or,"  and  it  follows  that  a  breach  of  either  condition  in- 
validates the  policy.  It  would  seem,  however,  that  unoccupied  in 
this  sense  must  be  intended  to  guard  against  the  same  condition 
as  the  word  vacant.  Where  it  is  evident  from  the  connection  that 
the  words  are  used  to  protect  the  company  against  the  extra  risk 
involved  in  the  absence  of  persons  from  the  premises,  they  should  be 
construed,  as  if  they  meant  the  same  thing.  Thus,  it  was  held  in 
New  Hampshire  that  a  house  from  which  the  insured  had  removed 
was  both  vacant  and  unoccupied,  although  certain  articles  of  furniture 
remained  in  the  house.330  Where  the  condition  was  that  the  policy 
should  be  void  if  the  house  become  vacant  and  unoccupied,  it  was 
held  that  there  was  no  breach  unless  the  building  was  both  empty 
and  unused  as  a  place  of  abode.  The  buildings  must  not  only  be 
unoccupied,  but  also  vacant,  and  a  dwelling  house  furnished  through- 
out, from  which  the  owner  had  removed  for  the  season,  intending  to  re- 
turn and  resume  possession,  was  not  vacant.  It  appeared  that  the 
defendant  issued  a  policy  containing  this  condition  on  the  plaintiff's 
summer  residence,  from  which  he  removed  in  November,  leaving  it 
furnished  and  in  charge  of  a  person  living  near,  and  intending  to  re- 
turn again  the  following  spring.  The  court  said :  "A  dwelling  house 
is  unoccupied  when  no  one  lives  therein,  but  is  not  then  necessarily 

320  Halpin  v.  Phenix  Ins.  Co.,  118  Ashworth  v.  Builders',  etc.,  Ins.  Co., 

N.  Y.  165    (1890).     To  the  same  ef-  112  Mass.  422  (1873). 

feet,  see  Albion  Lead  Works  v.  Wil-  33°  Moore  v.  Phoenix  Ins.  Co.,  62  N. 

liamsburg,  etc.,  Ins.  Co.,  2  Fed.  479  H.  240,  10  Am.  St.  384  (1882),  anno- 

(1880);    Keith  v.   Quincy,  etc.,   Ins.  tated. 
Co.,   10   Allen    (Mass.)    228    (1865); 


§    289  THE    STANDARD    POLICY.  288 

vacant.  A  house  filled  with  furniture  throughout  can  not  be  said 
to  be  vacant,  the  primary  and  ordinary  meaning  of  which  is  empty. 
To  avoid  the  policy  the  premises  must  not  only  be  unoccupied,  but 
also  vacant.  Force  should  be  given  to  both  words."331  The  same 
court  in  a  subsequent  case  recognized  the  fact  that  the  words  may 
have  different  meanings,  and  said  :332  "The  plaintiff  contends  that  the 
two  words,  'vacant'  and  'unoccupied,'  are  synonyms  and  are  to  be  inter- 
preted as  having  the  same  meaning,  and  that  meaning  is  empty, 
and  then  argues  that  as  the  dwelling  house  was  not  empty  there  was 
no  breach  of  condition.  There  are  doubtless  conditions  of  a  dwelling 
house,  or  other  like  structure,  when  either  word  applied  to  it,  or  both 
words  applied  to  it,  will  express  a  like  state  of  it.  There  are,  how- 
ever, states  of  it  ,when  that  will  not  be  the  case.  It  is  so  because 
the  different  things  which  are  receptive  of  the  epithets  of  vacant 
and  unoccupied  are  different  in  their  capability  and  susceptibility 
of  being  filled  or  occupied.  Some  can  not  have  one  of  those  terms 
applicable  to  them  without  the  other  at  the  same  time  being  also 
applicable.  *  *  *  And  it  is  because,  in  our  experience  of  the 
purpose  and  use  of  a  dwelling  house,  we  have  come  to  associate  our  no- 
tion of  the  occupation  of  it  with  the  habitual  presence  and  continued 
abode  of  human  beings  within  it,  that  the  word  applied  to  a  dwelling 
always  raises  that  conception  in  the  mind.  Sometimes,  indeed,  the 
use  of  the  word  'vacant/  as  applied  to  a  dwelling,  carries  the  no- 
tion that  there  is  no  dweller  therein,  and  we  would  not  be  sure  always 
to  get  or  convey  the  idea  of  an  empty  house  by  the  words  'vacant 
dwelling5  applied  to  it.  But  when  the  phrase  'vacant  or  unoccu- 
pied' is  applied  to  a  dwelling  house,  plainly  there  is  a  purpose — 
an  attempt  to  give  a  different  statement  of  the  condition  thereof; 
by  the  first  word  as  an  empty  house,  by  the  second  word  as  one  in 
which  there  is  not  habitually  the  presence  of  human  beings.  *  *  * 
The  term  'unoccupied,'  used  in  the  policy,  is  entitled  to  a  sense 
adapted  to  the  occasion  of  its  use  and  the  subject-matter  to  which  it  is 
applied." 

§  289.  Construction  when  applied  to  dwelling  house. — When  the 
insurance  is  upon  a  dwelling  house  the  condition  must  be  con- 
strued in  the  light  of  the  ordinary  use  of  such  premises.  The  evi- 

331  Herrman  v.  Merchants'  Ins.  Co.,  ^  Herrman  v.  Adriatic  F.  Ins. 
81  N.  Y.  184,  37  Am.  Rep.  488  Co.,  85  N.  Y.  162,  Woodruff  Ins.  Cas. 
(1880).  165  (1881). 


289 


VACANCY. 


289 


dent  intent  of  the  insurer  is  that  the  house  shall  be  used  as  a  place 
of  abode  for  human  beings,333  and  when  this  is  not  the  case  there 
is  added  a  risk  which  is  not  assumed  under  the  contract.  A  dwelling 
house  should  therefore  be  deemed  vacant  and  unoccupied  when,  it 
is  no  longer  used  as  a  place  of  abode.334  Hence,  the  casual  sleeping 
in  a  house  does  not  constitute  occupany  of  it.  A  policy  was  held  in- 
validated where  it  appeared  that  the  insured  moved  his  family  to  an- 
other building,  taking  all  the  furniture  except  a  few  beds  and  trifling 
household  articles,  trunks  containing  clothing  and  some  provisions 
in  the  pantry,  and  that  the  only  occupation  of  the  house  was  by 
laborers  in  the  employment  of  the  insured,  sleeping  therein  part 
of  the  time,  and  his  wife  going  there  every  day  to  get  provisions.335 
The  occupation  of  a  dwelling  house  as  a  mere  storehouse  is  not  a  com- 
pliance with  this  condition.336  Where  a  tenant  removed  a  week  be- 
fore the  fire,  and  the  furniture  was  all  stored  in  one  of  the  rooms  for 
the  purpose  of  being  removed,  and  no  one  had  slept  in  the  house  for 
more  than  a  month,  the  house  was  held  to  be  "vacant,  unoccupied 
or  uninhabited,"  although  a  person  went  there  occasionally  to  see 
if  the  goods  were  all  right.337  But  to  constitute  occupancy  of  a  dwell- 
ing house  it  nee,d  not  be  used  continuously.  The  family  may  be  ab- 
sent for  health,  business  or  convenience  for  reasonable  periods.  A 
dwelling  is  not  vacant  within  this  provision,  although  it  has  ceased  to 
be  vised  as  the  family  residence,  if  household  goods  remain  in  it  ready 


^Weidert  v.  State  Ins.  Co.,  19 
Ore.  261,  20  Am.  St.  809,  and  note 
(1890);  Bonefant  v.  American  F. 
Ins.  Co.,  76  Mich.  653,  43  N.  W.  682 
(1889).  See  note  in  Moore  v. 
Phoanix  Ins.  Co.,  10  Am.  St.  392 
(1886). 

334  North  American  F.  Ins.  Co.  v. 
Zaenger,  63  111.  464  (1872);  Ameri- 
can  Ins.  Co.  v.  Padfleld,  78  111.  167 
(1875);  Fitzgerald  v.  Connecticut  F. 
Ins.  Co.,  64  Wis.  463  (1885);  Alston 
v.  Old  North,  etc.,  Ins.  Co.,  80  N.  C. 
326  (1879);  Agricultural  Ins.  Co.  v. 
Hamilton,  82  Md.  88,  51  Am.  St.  457 
(1895). 

330  Agricultural  Ins.  Co.  v.  Hamil- 

19  —  ELLIOTT  INS. 


ton,  82  Md.  88,  51  Am.  St.  457 
(1895). 

^  Halpin  v.  ^Etna  F.  Ins.  Co.,  120 
N.Y.  70  (1890);  Limburg  v.  German 
F.  Ins.  Co.,  90  Iowa  709,  48  Am.  St. 
468  (1894),  reviewing  many  cases; 
Agricultural  Ins.  Co.  v.  Hamilton,  82 
Md.  88,  51  Am.  St.  457  (1895).  A 
house  is  unoccupied  when  no  one  is 
living  in  it:  Cook  v.  Continental 
Ins.  Co.,  70  Mo.  610,  35  Am.  Rep.  438 
(1879);  Herrman  v.  Adriatic  F.  Ins. 
Co.,  85  N.  Y.  162,  39  Am.  Rep.  644 
(1881);  Stoltenberg  v.  Continental 
Ins.  Co.,  106  Iowa  565,  68  Am.  St. 
323  (1898). 

337  Home  Ins.  Co.  v.  Boyd,  19  Ind. 
App.  173,  49  N.  E.  285  (1898). 


§    290  THE    STANDARD   POLICY.  290 

to  be  used  and  it  continues  to  be  occupied  by  one  or  more  members  of 
the  family  or  a  tenant  having  access  to  the  entire  building  for  the 
purpose  of  caring  for  it,  and  it  is  cared  for  and  some  use  made  of  it 
as  a  place  of  abode.338  So,  a  policy  is  not  invalidated  where  it  appears 
that  the  occupant  and  his  wife  absented  themselves  from  the  house 
for  a  considerable  period,  but  for  a  temporary  and  special  purpose, 
and  retained  it  as  a  residence,  intending  to  return  to  it,  leaving  his 
family  clothing  there,  and  his  wife  going  once  a  week  to  the  house  for 
the  purpose  of  caring  for  and  cleansing  it,  and  from  time  to  time  for 
other  purposes.339 

Where  the  policy  covered  the  house  and  barn  the  court  said :  "Oc- 
cupancy, as  applied  to  such  buildings,  implies  the  actual  use  of  the 
house  as  a  dwelling  house,  and  such  use  of  the  barn  as  is  ordinarily 
incident  to  a  barn  belonging  to  an  occupied  house,  or  at  least  more 
than  the  use  of  it  for  mere  storage.  The  insurer  had  the  right 
by  the  terms  of  the  policy  to  the  care  and  supervision  which  is  in- 
volved in  such  occupancy."340 

§  290.  Building — Contents — Vacancy. — The  insurance  upon  a 
building  may  be  invalidated  by  reason  of  a  breach  of  this  condition 
without  affecting  the  insurance  upon  the  personal  property  in  the 
building.  A  manufacturing  establishment  is  an  establishment  for  the 
manufacture  of  raw  material,  and  the  idea  excludes  the  material  upon 
which  it  operates.  "The  same  form  of  policy  is  prescribed  for  insur- 
ance upon  all  kinds  of  property,  and  general  provisions  would  nat- 
urally be  inserted  which  are  applicable  to  some  kinds  of  property 
and  not  to  other  kinds.  The  provision  in  regard  to  the  removal  of 
the  property  insured  is  evidently  intended  for  movable  property;  the 
provision  in  regard  to  the  premises  being  vacant  by  the  removal  of 
the  owner  or  occupant,  and  the  provision  in  regard  to  dangerous 
materials  being  kept  or  used  upon  the  premises,  evidently  relate  only 
to  buildings  insured.  There  is  more  reason  for  holding  that  those 
provisions  apply  to  furniture,  and  that  an  insurance  on  furniture  or 
any  personal  property  in  a  house  would  be  made  void  by  the  vacancy 
of  the  house  or  by  the  keeping  in  it  of  the  dangerous  articles  men- 
tioned, than  that  the  insurance  upon  a  stock  in  a  manufacturing  es- 

338  Moody  v.  Amazon   Ins.  Co.,  52  ^Ashworth  v.  Builders',  etc.,  Ins. 
Ohio  St.  12,  49  Am.  St.  699  (1894).  Co.,  112  Mass.  422,  17  Am.  Rep.  117 

339  Cummins   v.    Agricultural    Ins.  (1873). 
Co.,  67  N.  Y.  260  (1876). 


291  VACANCY.  §    291 

tablishment  would  be  made  void  if  the  factory  should  cease  operation. 
All  these  provisions  have  full  meaning  and  effect  when  applied,  ac- 
cording to  their  terms,  to  an  insurance  of  property  to  which  they  can 
be  applied.  To  extend  them  to  an  insurance  of  property  to  which 
they  do  not  apply,  because  the  destruction  of  such  property  not  in- 
sured may  cause  the  destruction  of  property  insured,  is  against  all 
rules  of  construction  and  seems  to  be  a  plain  interpolation  of  what  is 
not  in  the  contract.  The  building,  and  the  machinery,  fixtures  and 
appliances,  constitute  the  manufacturing  establishment.  It  is  going 
far  enough  to  hold  that  in  one  insurance  of  machinery  the  premises 
insured  are  a  manufacturing  establishment  of  which  the  machinery 
constitutes  a  part."341 

§  291.  Illustrations  of  construction  of  this  provision. — A  building 
is  unoccupied  where  a  tenant  who  occupies  the  same  as  a  store  aban- 
dons it  before  the  end  of  the  term  and  leaves  therein  only  a  small 
amount  of  merchandise  of  a  nominal  value,  although  he  retains  the 
key  to  the  building  at  the  request  of  the  insured.342  So,  a  dwelling  or 
tenement  house  is  vacant  and  unoccupied  if  the  occupant  has  left  it, 
although  some  trifling  articles  of  furniture  of  little  value  are  left 
in  one  of  the  rooms.343  The  fact  that  a  tenant  intending  to  remove 
goes  away  to  meet  his  wife,  leaving  two  of  his  children  in  the  house, 
with  instructions  to  remain  there  until  he  returned,  and  that  a 
small  portion  of  the  furniture  has  been  removed,  does  not  constitute 
a  breach  of  this  condition.344  A  building  was  not  occupied  by  a  tenant 
as  a  dwelling  house  where  the  tenant  had  moved  out  and  the  son  of  the 
owner  slept  in  the  house  during  the  day  and  worked  nights,  having 
only  a  cot,  chair  and  alarm  clock  in  the  house,  and  the  family  of  the 
owner  resided  next  door  and  obtained  water  from  a  cistern  in  the 
kitchen  of  this  house,  and  the  owner  went  through  the  house  every 
day.345  The  fact  that  a  tenant  and  his  servants  had  for  two  days 
before  the  fire  been  cleaning  the  house  preparatory  to  its  occupation 
does  not  constitute  occupation.346  So,  a  house  was  not  occupied  al- 

341  Stone  v.  Howard  Ins.  Co.,  153        ^  Eureka,  etc.,  Ins.  Co.  v.   Bald- 
Mass.  475,  27  N.  E.  6  (1891).  win,   62   Ohio   St.   368,   57   N.   E.   57 

342  Home  Ins.  Co.  v.  Scales,  71  Miss.     (1900). 

975,  42  Am.  St.  512  (1894).  '""Thomas  v.  Hartford  F.  Ins.  Co., 

343  Schuermann  v.  Dwelling  House  21  Ky.  L.  914,  53  S.  W.  297,  rehear- 
Ins.  Co.,  161  111.  437,  52  Am.  St.  377  ing  denied    (1899)    21  Ky.  L.  1139, 
(1896).  56  S.  W.  264. 

•"Burlington  Ins.  Co.  v.  Lowery, 
61  Ark.  108,  54  Am.  St.  196  (1895). 


§    291  THE    STANDARD    POLICY.  292 

though  two  workmen  took  their  meals  there  and  kept  their  trunks 
and  clothing  in  the  building  and  slept  at  night  in  one  of  the  rooms, 
but  were  employed  elsewhere  during  the  day.347  So,  a  dwelling 
house  is  unoccupied  where  the  house  remains  vacant  for  three  months 
and  is  then  let  to  a  tenant,  who,  up  to  the  time  of  the  loss,  has  placed 
therein  implements  for  cleaning  it,  but  not  otherwise  occupied  the 
premises.348 

A  church  used  by  a  congregation  in  the  ordinary  manner  that  such 
buildings  are  used,  and  which  is  occasionally  visited  by  the  sexton 
at  times  when  the  congregation  is  not  in  session,  is  occupied,  although 
there  was  no  church  meeting  in  the  building  for  a  period  of  six  weeks, 
during  which  time  there  was  no  minister  of  the  church  and  the  con- 
gregation was  awaiting  the  arrival  of  a  new  minister.349  A  house 
was  not  vacant  where  a  part  of  the  tenant's  goods  were  in  the  house  the 
night  of  the  fire,  and  the  tenant  had  retained  the  key  to  enable  him 
to  remove  the  same  the  next  day,  although  he  had  already  removed 
a  part  of  the  goods  and  the  house  was  not  occupied  that  night.350 
An  ice  house  is  not,  as  a  matter  of  law,  vacant  and  unoccupied  be- 
cause there  is  nothing  therein  at  the  time  it  was  burned,  in  October, 
except  the  tools  used  in  putting  up  ice  and  a  small  quantity  of  unmer- 
chantable ice.351  The  premises  are  not  vacated  by  a  tenant  leaving 
the  premises  when  threatened  by  a  forest  fire  in  order  to  remove  his 
sick  wife  to  a  place  of  safety,  leaving  several  people  to  defend  the 
property  against  fire.352  So,  occupation  by  one  tenant  is  within  the 
provision  that  it  shall  become  void  if  the  premises  be  occupied  by 
tenants.353  A  house  is  not  vacant  where  it  appears  that  the  occupant 
of  the  house  commenced  to  move  out  at  nine  o'clock  in  the  morning 
and  intended  to  complete  the  removal  of  the  goods  in  the  afternoon, 
and  the  house  was  destroyed  by  fire  at  noon.354  So,  a  building  de- 
scribed as  "a  ten  tenement  frame  block"  is  not  unoccupied  if  two  of 
the  tenements  are  in  actual  use  and  occupancy  as  residences.355  Where 

347  Poor  v.  Humboldt  Ins.  Co.,  125  F.  Ins.  Co.,  99  Iowa  193,  68  N.  W. 

Mass.  274  (1878).  600  (1896). 

348Litch  v.  North  British,  etc.,  Ins.  ^Raymond  v.  Farmers',  etc.,  Ins. 

Co.,  136  Mass.  491  (1884).  Co.,    114    Mich.    386,    72    N.    W.    254 

349  Hampton    v.    Hartford    F.    Ins.  (1897). 

Co.,  65  N.  J.  L.  265,  47  Atl.  433,  52  363  Elliott    v.     Farmers'     Ins.     Co. 

L.  R.  A.  344  (1900).  (Iowa),  86  N.  W.  224   (1901). 

360  Norman  v.   Missouri,   etc.,   Ins.  3M  Insurance    Co.    v.    Coombs,    19 

Co.,  74  Mo.  App.  456  (1898).  Ind.  App.  331,  49  N.  E.  471    (1898). 

351  Des  Moines  Ice  Co.  v.  Niagara  ^Harrington   v.    Fitchburg,    etc., 

Ins.  Co.,  124  Mass.  126  (1878). 


293  CHANGE   OF    LOCATION — RENEWAL    OF    CONTRACT.  §    292 

the  former  occupant  of  a  house  had  moved  with  his  family  into  an- 
other house,  where  they  slept  and  took  their  meals,  the  house  was 
vacant,  although  some  furniture  remained  in  the  house  and  the  keys 
had  not  been  surrendered  to  the  landlord.356 

XII.     Authorized  Change  of  Location. 

If  the  property  covered  by  this  policy  is  so  endangered  by  fire  as 
to  require  removal  to  a  place  of  safety,,  and  is  so  removed,  that  part  of 
this  policy  in  excess  of  its  proportion  of  any  loss  and  of  the  value  of 
property  remaining  in  the  original  location,  shall,  for  the,  ensuing 
five  days  only,  cover  the  property  so  removed  in  the  new  location;  if 
removed  to  more  than  one  location,  such  excess  of  this  policy  shall 
cover  therein  for  such  five  days  in  the  proportion  that  the  value  of 
any  one  such  new  location  bears  to  the  value  in  all  such  new  locations; 
but  this  company  shall  not,  in  any  case  of  removal,  whether  to  one  or 
more  locations,  be  liable  beyond  the  proportion  that  the  amount  hereby 
insured  shall  bear  to  the  total  insurance  on  the  whole  property  at  the 
time  of  fire,  whether  the  same  cover  in  new  location  or  not.35'1 

§  292.  In  general. — This  provision  authorizes  the  removal  of  the 
property  when  endangered  by  fire  and  provides  that  the  policy  shall 
remain  in  force  for  five  days  after  such  removal.  It  also  provides  for 
the  amount,  of  recovery  whether  the  property  is  in  tne  new  location 
or  not.  It  does  not  seem  to  have  been  construed  by  the  courts. 
There  are,  however,  numerous  cases  which  determine  the  liability 
of  the  company  for  damage  occasioned  while  the  property  is  being 
removed  from  a  building  which  is  on  fire  or  threatened  with  de- 
struction.358 

XIII.     Renewal  of  Contract. 

This  policy  may  by  a  renewal  be  continued  under  the  original  stipu- 
lations, in  consideration  of  premium  for  the  renewed  term,  pro- 

350  Corrigan  v.  Connecticut  F.  Ins.  policies    of    Massachusetts,    Minne- 

Co.,  122  Mass.  298  (1877).  sota,    Maine    and    New    Hampshire 

857  This  provision  is  found  in  the  provide  that:   "If  such  removal  shall 

standard  policies  of  New  York,  New  be  necessary  for  the  preservation  of 

Jersey,   Connecticut,   Rhode   Island,  the  property  from  fire,  this  policy 

Wisconsin,      Louisiana,      Michigan,  shall  be  valid  without  such  assent 

North  Dakota,  South  Dakota,  Iowa,  for  five  days  thereafter." 

and  North  Carolina.     The  standard  **  See  §  218,  supra. 


§    293  THE    STANDARD   POLICY.  294 

vided  that  any  increase  of  hazard  must  be  made  known  to  this  com- 
pany at  the  time  of  renewal  or  this  policy  shall  be  void.359 

§  293.  In  general. — Whether  a  renewal  creates  a  new  contract  de- 
pends upon  its  terms.  It  has  been  held  that  every  renewal  of  a  policy 
of  insurance,  being  upon  a  new  consideration  and  optional  with  both 
parties,  creates  a  new  contract,  and  is,  unless  otherwise  expressed, 
subject  to  the  terms  and  conditions  which  are  contained  in  the  original 
policy.360  Where  the  contract  is  renewed  from  year  to  year  the  descrip- 
tion of  the  insured  property  in  the  original  policy  must  be  applied  to 
the  condition  of  the  property  at  the  date  of  the  last  renewal.361  The 
clause  quoted  from  the  standard  form  does  not  provide  that  the  pre- 
mium must  be  paid  at  the  time  of  the  renewal.  In  Maryland  it  was 
held  that  where,  under  a  policy  of  insurance,  an  option  was  given  to 
renew  the  same  at  its  expiration,  and  the  insured  elected  to  renew, 
and  notified  the  company  of  its  election,  such  notification  did  not 
bind  the  company  unless  accompanied  by  payment  or  tender  of 
payment  of  the  premium.362  Where  an  application  for  renewal  was 
made,  and  the  company's  agent  filled  out,  signed  and  delivered  the 
policy  without  asking  for  payment  of  the  premium,  it  was  held  that 
there  was  a  valid  contract.363  But  where  the  company  provided  that 
it  should  not  be  liable  by  virtue  of  the  policy  or  any  renewal  thereof 
until  the  premium  had  been  actually  paid,  and  it  had  been  the  custom 
of  the  agent  to  make  renewals,  deliver  them  and  collect  the  premium, 
and  ten  days  before  the  original  contract  expired  the  insured  asked 
the  agent  to  attend  to  its  renewal,  and  he  promised  to  do  so,  but  noth- 
ing was  done  and  the  property  was  burned  six  months  thereafter, 
it  was  held  that  the  agent  had  not  waived  prepayment  of  the  pre- 

359  This  provision  is  found  in  the  Co.  v.  Kranich,  36  Mich.  289  (1877). 
standard  policies  of  New  York,  New  Contra,  New  England,  etc.,  Ins.  Co. 
Jersey,    Connecticut,    Rhode    Island,  v.  Wetmore,  32  111.  221  (1863). 
Wisconsin,     South     Dakota,     Iowa,  3C1  Garrison  v.  Farmers',  etc.,  Ins. 
Michigan,  North  Dakota,  Louisiana,  Co.,    56    N.    J.    L.    235,    28    Atl.    8 
and  North  Carolina.    It  is  not  found  (1893). 

in  the  standard  policies  of  Massa-  'M2  American   Casualty  Co.'s  Case, 

chusetts,  Minnesota,  Maine  and  New  82  Md.  535;   s.  c.  sub  nom.  Boston, 

Hampshire.  etc.,  Co.  v.  Mercantile,  etc.,  Co.,  34 

360  Hartford  F.  Ins.  Co.  v.  Walsh,  Atl.  778,  38  L.  R.  A.  97  (1896). 

54  111.  164,  5  Am.  Rep.  115  (1870);  """Luna  v.  United  States  F.  Ins. 
Brady  v.  Northwestern  Ins.  Co.,  11  Co.,  104  Mich.  397,  62  N.  W.  562 
Mich.  425  (1863);  Aurora,  etc.,  Ins.  (1895). 


295 


RENEWAL   OF    CONTRACT. 


293 


miuin  and  that  the  company  was  not  liable  on  the  policy.364  Where 
there  was  a  verbal  agreement  to  renew  the  risk,  and  payment  of  the 
premium  was  to  be  made  on  the  first  day  of  the  succeeding  month, 
which  fell  on  Sunday,  an  offer  to  pay  on  Monday  was  sufficient,  al- 
though the  building  was  burned  on  Sunday.365  The  authorized  agent 
of  the  company  may  renew  a  policy  by  parol,  although  the  policy 
provides  that  it  can  be  done  only  in  writing.366  A  renewal 
need  not  be  under  seal,  although  the  policy  is  under  seal.367  An 
agent  of  the  company  has  power  to  make  a  valid  parol  agreement 
to  renew  a  contract  of  insurance,  although  the  policy  and  certificates 
of  renewal  issued  by  the  company  provide  that  it  shall  not  be  valid 
unless  countersigned  by  the  agent.368 

An  agreement  to  renew  must  have  all  the  elements  of  a  contract.389 
Where  the  authority  of  the  agent  was  limited  by  the  policy  so  that 
he  could  only  renew  on  the  same  policy,  "provided  the  premium  be 
paid  or  indorsed  on  the  policy  or  a  receipt  given,"  it  was  held  that 
the  company  was  not  liable  where  the  evidence  merely  showed  a  con- 
versation between  the  insured  and  the  agent  which  took  place  four 


304Zigler  v.  Phoenix  Ins.  Co.,  82 
Iowa  569,  48  N.  W.  987  (1891). 

scs  Taylor  v.  Germania  Ins.  Co.,  2 
Dill.  (C.  C.)  282,  Fed.  Gas.  No. 
13,793  (1872).  An  insurance  com- 
pany agreed  that  a  policy  for  one 
year  should  be  a  permanent  risk, 
and  that  its  officers  should  call  for 
the  premiums  as  they  became  due, 
and  leave  the  certificates  of  pay- 
ment and  renewal.  The  assured 
party  relying  on  this  arrangement, 
did  not  call  and  pay  the  renewal 
premium,  or  get  a  renewal  certifi- 
cate. Before  any  of  the  officers 
called  for  the  renewal  premium,  the 
property  was  destroyed  by  fire. 
Held,  that  the  company  was  liable 
for  the  loss:  Trustees,  etc.,  v. 
Brooklyn  F.  Ins.  Co.,  18  Barb.  (N. 
Y.)  69  (1854). 

300  Cohen  v.  Continental  F.  Ins. 
Co.,  67  Tex.  325,  3  S.  W.  296,  60  Am. 
Rep.  24  (1887).  See  Royal  Ins.  Co. 


v.  Beatty,  119  Pa.  St.  6,  12  Atl.  607 
(1888). 

307  Lockwood  v.  Middlesex,  etc., 
Assur.  Co.,  47  Conn.  553  (1880). 

368  Post  v.  JEtna  Ins.  Co.,  43  Barb. 
(N.  Y.)  351  (1864).  See,  also,  Co- 
hen v.  Continental  F.  Ins.  Co.,  67 
Tex.  325,  3  S.  W.  296,  60  Am.  Rep. 
24  (1887). 

3"9  O'Reilly  v.  London  Assur.  Corp., 
101  N.  Y.  575,  5  N.  E.  568  (1886); 
Johnson  v.  Connecticut  F.  Ins.  Co., 
84  Ky.  470  (1886).  Mere  silence  of 
the  agent  when  asked  if  the  com- 
pany would  renew  is  not  a  renewal : 
Royal  Ins.  Co.  v.  Beatty,  119  Pa.  St. 
6,  12  Atl.  607  (1888).  As  to  the  au- 
thority of  the  agent  to  renew,  see 
Carroll  v.  Charter  Oak  Ins.  Co.,  40 
Barb.  (N.  Y.)  292  (1863);  Baubie  v. 
^Etna  Ins.  Co.,  2  Dill.  (C.  C.)  156 
(1873).  A  contract  to  "hold"  certain 
expiring  policies  is  a  renewal: 
Baker  v.  Westchester  F.  Ins.  Co., 
162  Mass.  358,  38  N.  E.  1124  (1894). 


§    293  THE    STANDARD    POLICY.  296 

weeks  before  a  renewal  was  necessary,  of  which  the  agent  made  no 
entry  on  the  policy  or  in  his  books,  gave  no  renewal  receipt,  and 
on  which  the  insured  never  paid  any  premium  or  made  any  arrange- 
ment therefor.370 

When  a  policy  is  renewed  it  is  the  duty  of  the  insured  to  inform 
the  company  of  any  change  in  the  nature  or  use  of  the  property  which 
increases  the  hazard.  Where  the  insured  made  representations  as 
to  the  nature  of  the  occupancy  of  the  premises,  and  stipulated  that, 
should  they  be  used  and  occupied  so  as  to  increase  the  risk  without  the 
notice  and  consent  of  the  insurer  in  writing,  the  policy  should  be 
void,  and  that  the  insurance  might  be  continued  for  such  time  as 
might  be  agreed  upon,  the  performance  of  such  conditions,  unless 
otherwise  specified  in  writing,  should  be  construed  as  continued  under 
the  original  representations,  and  an  omission  to  give  notice  of  a 
change  of  occupancy,  increasing  the  risk,  rendered  a  subsequent  re- 
newal invalid.371  So,  where  a  fire  policy  provided  that  "this  insur- 
ance, the  risk  not  being  changed,  may  be  continued  for  such  further 
time  as  shall  be  agreed  on  *  *  *  under  the  original  representa- 
tion, *  *  *  but  in  case  there  shall  have  been  a  change  in  the 
risk,  either  within  itself  or  of  the  neighboring  buildings,  not  made 
known  to  the  company  by  the  assured  at  the  time  of  renewal,  this 
policy  and  renewal  shall  be  void,"  it  was  held,  that  if,  after  the  first 
insurance  and  before  the  renewal  policy  was  delivered,  there  was  any 
change  in  the  risk  increasing  the  hazard,  whether  known  to  the  in- 
sured or  not,  and  it  was  not  made  known  to  the  company  at  the  time 
of  the  renewal,  the  policy  and  the  renewal  were  void.372  There  is  no 
increase  of  hazard  under  a  policy  which  contains  no  provision  against 
alienation,  where  the  insured  sells  the  property  and  takes  back  a 
mortgage  as  security  for  the  purchase-money,  and  it  is  not  necessary 
to  give  notice  of  this  change  in  the  nature  of  the  interest  at  the  time 
of  the  renewal.373  Although  by  the  terms  of  a  mortgage  clause  in  the 
policy  the  rights  of  a  mortgagee  were  not  to  be  affected  by  any  act  of 
the  mortgagor  in  increasing  the  hazard  during  the  life  of  the  policy, 
it  is  necessary  upon  a  renewal  of  the  policy  to  inform  the  company 
of  any  facts  which  increase  the  hazard.374  Like  other  provisions,  this 

370  O'Reilly  v.  London  Assur.  Corp.,  373  Phelps  v.  Gebhard  F.  Ins.  Co., 

101  N.  Y.  575,  5  N.  E.  568  (1886).  9  Bosw.   (N.  Y.)  404  (1862). 

m  Wolff  v.  Oswego,  etc.,  Ins.  Co.,  **  Cole  v.  Germania  F.  Ins.  Co.,  99 

6  N.  Y.  St.  Rep.  548  (1887).  N.  Y.  36,  1  N.  B.  38  (1885). 

^Brueck  v.  Phrenix  Ins.  Co.,  21 
Hun  (N.  Y.)  542  (1880). 


297  RENEWAL    OF    CONTRACT.  §    294 

requirement  may  be  waived.  Where  the  president  of  the  company 
often  stopped  at  a  hotel  which  was  the  subject  of  the  insurance, 
while  additions  were  being  made  which  were  claimed  to  increase  the 
risk,  and  gave  his  consent  to  the  making  of  such  changes,  it  was  held 
that  there  was  a  waiver  of  a  breach  of  the  conditions,  and  upon  re- 
newal of  the  policy  it  was  not  necessary  to  make  representations  in 
writing  as  to  the  changes.375 

§  294.  Illustrations. — Where  the  policy  does  not  state  the  pro- 
cedure necessary  to  effect  such  renewal,  the  company  can  not  show 
that  there  were  secret  limitations  upon  the  authority  of  its  agent  to 
contract  for  renewal.376  Where  a  policy  upon  a  building  was  re- 
newed it  was  held  that  an  ordinance  passed  during  the  life  of  the 
original  policy  forbidding  the  rebuilding  or  repairing  of  wooden 
buildings  within  certain  limits  entered  into  the  new  contract  cre- 
ated by  renewal.377  A  policy  covered  the  plaintiff's  property  gen- 
erally, and  an  indorsement  apportioned  it  among  several  items.  Be- 
fore the  term  expired  plaintiff  took  the  policy  to  defendant's  agent 
and  requested  a  renewal.  Nothing  was  said  in  reference  to  a  differ- 
ent policy,  or  to  any  alteration  of  the  terms  of  the  existing  one,  and 
it  was  held  that  it  was  the  intention  of  the  parties  that  the  new 
policy  should  contain  the  same  provisions  as  those  indorsed  on  the 
old  policy.378  Where  the  policy  covered  a  specified  sum  on  a  grist 
mill,  and  another  sum  on  the  machinery  therein,  and  was  renewed  in 
general  terms  for  an  amount  equal  to  the  entire  insurance,  without 
any  distribution  of  the  risk,  it  was  held  that  the  insurance  should 
thereafter  be  without  distribution  and  apply  generally  to  both  build- 
ing and  machinery.379  The  owner  of  an  insured  building  sold  one- 
half  of  it  to  a  partner,  and  at  the  expiration  of  the  original  policy 
a  renewal  certificate  was  issued  reciting  the  receipt  of  the  premium 
from  the  firm  and  the  continuation  of  the  policy,  and  that  "the 
renewal  is  made  upon  condition  that  the  original  policy  continues 
in  force,  and  that  there  has  been  no  change  in  the  risk  since  first 
insured  not  noticed  on  the  books  of  this  company,  otherwise  this 

875  Martin  v.  Jersey  City  Ins.  Co..  378  Cochran  Cotton  Seed  Oil  Co.  v. 

44  N.  J.  L.  273  (1882).  Phoenix    Ins.    Co.,    7    Misc.    (N.    Y.) 

378  McCullough  v.  Hartford  F.  Ins.  695,  28  N.  Y.  Supp.  45   (1894). 

Co.,  2  Pa.  Super.  Ct.  233  (1896).  m Driggs  v.   Albany   Ins.   Co.,   10 

377  Brady  v.  Northwestern  Ins.  Co.,  Barb.  (N.  Y.)  440  (1851). 
11  Mich.  425  (1863). 


§    295  THE    STAXDAPD   POLICY.  298 

renewal  is  not  binding."  It  was  held  that  the  insurers  intended  to 
continue  the  insurance  on  the  property  on  the  terms  and  conditions 
expressed  in  the  policy,  for  the  benefit  of  the  parties  who  paid  the 
premium.380 

§  295.  Reformation  of  the  policy. — A  renewal  policy  containing 
a  coinsurance  clause  which  was  not  in  the  original  policy  will  be 
reformed  where  it  apjpears  that  the  renewal  was  solicited  by  the  com- 
pany with  the  understanding  that  the  two  policies  were  to  be  the 
same,  and  that  the  insured,  relying  upon  the  agreement  and  good 
faith  of  the  company,  did  not  read  the  policy  and  discover  the  ma- 
terial changes  until  after  the  loss  had  occurred.381  A  mortgagee 
applied  to  the  company  for  a  renewal  with  an  increase  of  the  insur- 
ance, which  was  agreed  to,  and  the  new  policy  contained  a  clause  not 
in  the  first,  that  in  case  of  loss  the  mortgagee  should  assign  to  the 
company  all  her  right  to  receive  satisfaction  from  any  other  person, 
and  that  the  loss  should  not  be  payable  until  after  the  enforcement 
of  the  original  security,  and  that  the  company  should  only  be  liable 
for  so  much  as  could  not  be  collected.  The  mortgagee  did  not  dis- 
cover the  change  until  after  loss,  and  it  was  held  that  he  might 
maintain  an  action  to  reform  the  policy  and  recover  thereon  as  re- 
formed, but  that  it  was  discretionary  with  the  court  to  refuse  relief 
on  the  ground  of  hi.s  neglect  to  discover  the  change  within  a  reason- 
able time.382 

XIV.     Cancellation  of  Policy. 

This  policy  shall  be  canceled  at  any  time  at  the  request  of  the  in- 
sured; or  by  the  company  by  giving  five  days'  notice  of  such  cancel- 
lation. If  this  policy  shall  be  canceled  as  hereinbefore  provided.,  or 
become  void  or  cease,  the  premium  having  been  actually  paid,  the  un- 
earned portion  shall  be  returned  on  surrender  of  this  policy  or  last 
renewal,  this  company  retaining  the  customary  short  rate,  except  that 
when  this  policy  is  canceled  by  this  company  by  giving  notice  it  shall 
retain  only  the  pro  rata  premium.383 

^Lancey  v.  Phoenix  F.   Ins.   Co.,  ^  This  provision  is  found  in  the 

56  Me.  562  (1869).  standard  policies  of  New  York,  New 

381  Palmer  v.  Hartford  Ins.  Co.,  54  Jersey,    Connecticut,   Rhode   Island, 
Conn.  488,  9  Atl.  248  (1887).  Louisiana,      South     Dakota,     Iowa, 

382  Hay  v.  Star  F.  Ins.  Co.,  77  N.  Y.  Michigan,  North  Dakota,  and  North 
235,  33  Am.  Rep.  607  (1879).  Carolina.     The  Wisconsin  provision 


299 


CANCELLATION    OF    POLICY. 


296 


§  296.  In  general. — In  a  number  of  states  there  are  statutes  which 
secure  to  the  parties  the  right  to  cancel  a  contract  of  insurance  upon 
proper  notice.  Unless  there  is  such  a  statute  or  stipulation  in  the 
contract  of  insurance,  the  policy  can  not  be  canceled  without  the 
consent  of  the  insured.384  The  right  does  not  exist  unless  reserved, 
and  the  clause  conferring  the  right  is  in  the  nature  of  a  condition 
precedent  which  must  be  strictly  complied  with  in  order  to  make 
an  effort  to  cancel  effective.385  Where  the  policy  provides  that  "the 
insurance  may  be  terminated  at  any  time  at  the  request  of  the  in- 
sured/'' a  surrender  of  the  policy,  with  the  request  that  it  be  ter- 
minated, operates  ipso  facto  as  a  cancellation.386  Where  the  con- 
tract is  intended  to  bind  the  insurer  only  so  long  as  it  chooses,  it 


is  as  follows:  "This  policy  shall  be 
canceled  at  any  time  at  the  request 
of  the  insured;  or  by  the  company 
by  giving  five  days'  notice  of  such 
cancellation;  unless  during  a  time 
in  which  the  hazard  shall  be  in- 
creased solely  by  the  act  of  God, 
and  in  such  case  and  during  such 
time  of  such  increase  of  hazard  the 
company  shall  not  cancel  this  policy 
except  upon  sixty  days'  notice  of 
such  cancellation,  without  the  con- 
sent of  the  assured."  The  standard 
policies  of  Massachusetts,  Minne- 
sota, Maine  and  New  Hampshire 
have  the  following  provision:  "This 
policy  may  be  canceled  at  any  time 
at  the  request  of  the  insured,  who 
shall  thereafter  be  entitled  to  a  re- 
turn of  the  portion  of  the  premium 
remaining,  after  deducting  the  cus- 
tomary monthly  short  rates  for  the 
time  this  policy  shall  have  been  in 
force.  The  company  also  reserves 
the  right  after  giving  written  no- 
tice to  the  insured,  and  to  any 
mortgagee  to  whom  this  policy  is 
made  payable,  and  tendering  to  the 
insured  a  ratable  proportion  of  the 
premium,  to  cancel  this  policy  as  to 
all  risks  subsequent  to  the  expira- 


tion of  ten  days  from  such  notice, 
and  no  mortgagee  shall  then  have 
the  right  to  recover  as  to  such 
risks." 

384  Alliance,  etc.,  Ins.  Co.  v.  Swift, 
10  Gush.   (Mass.)  433  (1852). 

385  Wicks  v.  Scottish,  etc.,  Ins.  Co., 
107  Wis.  606,  83  N.  W.  781   (1900); 
Van  Valkenburgh  v.  Lenox  F.  Ins. 
Co.,  51  N.  Y.  465  (1873).    Provisions 
for  cancellation  in  an  insurance  pol- 
icy must  be  strictly  followed  to  ef- 
fect  that   result:      John    R.    Davis 
Lumber  Co.  v.  Hartford  F.  Ins.  Co., 
95  Wis.  226,  37  L.  R.  A.  131   (1897). 
Transactions  with  reference  to  the 
cancellation  of  an  insurance  policy 
must  be  construed   reasonably  and 
fairly,  and  in  accordance  with  the 

•evident  understanding  of  the  par- 
ties at  the  time:  Bingham  v.  Fire 
Ins.  Co.,  74  Wis.  498  (1889). 
The  cancellation  of  a  policy  and 
the  retention  of  the  pro  rata  pre- 
mium is  a  confirmation  of  the  va- 
lidity of  the  policy:  Commercial 
Assur.  Co.  v.  New  Jersey  Rubber 
Co.  (N.  J.),  49  Atl.  155  (1901). 

380  Crown  Point  Iron  Co.  v.  ^Etna 
Ins.  Co.,  127  N.  Y.  608,  14  L.  R.  A. 
147  (1891). 


§    297  THE    STANDARD    POLICY.  300 

may  cancel  the  policy  at  any  time  by  notice  to  the  other  party.387 
After  the  liability  of  the  company  has  become  fixed  by  fire,  notice 
of  a  previous  election  to  cancel  the  policy  has  no  effect  on  the  con- 
tract.388 

The  right  to  cancel  the  policy  thus  reserved  to  the  company  can 
not  be  exercised  under  circumstances  which  would  operate  as  a  fraud 
on  the  insured;  as  where  notice  was  given  pending  an  approaching 
conflagration  which  threatened  to  destroy  the  insured  property.389 
Where  the  policy  provides  for  notice  it  means  notice  to  the  insured.390 
His  rights  can  not  be  affected  by  the  conduct  of  others  who  have  no 
authority  to  represent  him.  The  consent  of  a  mortgagee,  to  whom 
the  policy  is  made  payable  in  case  of  loss,  to  a  cancellation  without  the 
knowledge  of  the  insured,  is  of  no  effect  and  does  not  deprive  him 
of  his  rights.391 

§  297.  The  time. — This  provision  requires  five  days'  notice  of  an 
intent  to  cancel  the  contract.  An  attempt  to  transfer  the  risk  from 
a  company  which  has  refused  to  carry  it  to  another  without  the  con- 
sent of  the  insured,  after  the  agent  has  placed  the  risk  in  the  former 
company  under  a  general  request  for  insurance,  without  specifying 
any  company,  is  ineffectual  when  the  five  days'  notice  of  the  cancella- 
tion of  the  first  policy  stipulated  for  therein  was  not  given.392  The 
parties  may  of  course,  by  mutual  consent,  rescind  the  contract  with- 
out such  notice.393 

§  298.  Authority  of  agent  to  cancel. — An  agency  to  procure  in- 
surance is  not,  as  a  matter  of  law,  presumed  to  continue  for  the  pur- 
pose of  canceling  the  policy.394  It  must  appear  that  the  person  to 
whom  notice  was  given  was  at  the  time  the  authorized  agent  of  the 

387  Manchester  P.  Assur.  Co.  v.  In-  382  Clark  v.  Ins.  Co.,  89  Me.  26,  35 

surance  Co.  of  111.,  91  111.  App.  609  L.  R.  A.  276  (1896). 

(1900).  ^Sea   Ins.   Co.   v.   Johnston,   105 

•""Massasoit    Steam    Mills    Co.    v.  Fed.  286,  44  C.  C.  A.  477  (1900). 

Western  Assur.   Co.,  125  Mass.   110  ^  Broadwater  v.  Lion  F.  Ins.  Co., 

(1878).  34   Minn.   465    (1886);    Hermann  v. 

389  Home  Ins.  Co.  v.  Heck,  65  111.  Niagara  F.  Ins.  Co.,  100  N.  Y.  411 
111  (1872).  (1885);  Grace  v.  American,  etc.,  Ins. 

390  London,  etc.,  Ins.  Co.  v.  Turn-  Co.,  109  U.  S.  278   (1883);  White  v. 
bull,  86  Ky.  230  (1887).  Connecticut  F.   Ins.   Co.,   120   Mass. 

381  Peterson  v.  Hartford  F.  Ins.  Co.,  330  (1876);  Adams  v.  Manufactur- 
87  111.  App.  567  (1900).  ers',  etc.,  Ins.  Co.,  12  Ins.  L.  J.  787 

(1883). 


301  CANCELLATION    OF    POLICY.  §    298 

insured  for  the  purpose  of  canceling  the  policy,  or  that  the  act  was 
subsequently  ratified  by  the  insured.395  So,  where  a  broker  had  been 
employed  by  the  plaintiff  to  procure  a  fire  policy  on  certain  property, 
notice  afterwards  given  by  the  company  to  such  broker  of  an  inten- 
tion to  cancel  the  policy  was  held  not  sufficient  to  effect  a  cancella- 
tion.396 Mere  notice  to  a  broker  or  the  agent  of  the  insured  that  the 
company  desires  to  cancel  the  policy  is  not  enough  where  the  policy 
contains  a  provision  that  it  may  be  terminated  by  notice  to  the  per- 
son who  procured  it.397  The  agent  of  the  company  can  not  give  no- 
tice to  himself  as.  the  person  who  procured  the  insurance.398  A  de- 
livery of  the  policy  to  an  agent  of  the  insurer  for  cancellation  by  a 
clerk  in  the  office  of  the  agent  of  the  insured,  who  was  authorized  to 
deliver  up  the  policy  for  cancellation,  is  the  act  of  the  insured,  and 
not  of  the  insurer,  and  will  support  a  cancellation  of  the  policy.399 
But  where  the  insured  left  the  policy  in  the  hands  of  her  agent,  and 
thus  placed  it  in  his  power  to  mislead  the  insurer  by  surrendering 
the  policy,  and  the  insurer  acted  in  good  faith  in  canceling  it,  it  was 
held  that  the  insured  was  bound  by  this  surrender,  although  it  was 
without  authority.400 

An  agent  may,  under  certain  circumstances,  represent  both  parties. 
A  general  insurance  agency  representing  both  parties,  with  authority 
to  act  upon  applications  and  issue  policies,  as  well  as  to  cancel  the 
same  in  proper  cases,  may  also  act  as  the  agent  of  the  insured  in 
waiving  notice  of  cancellation  and  in  accepting  delivery  of  the  new 
policy  when  substituted  for  the  one  canceled.  In  Minnesota  it  was 
said:401  "Such  a  business  arrangement  is  in  many  cases  adopted  by 
business  firms  and  corporations  in  cities,  and  is  beneficial  both  to  the 
underwriters  and  parties  insured;  adding  to  the  business  of  the  one 
and  relieving  the  other  from  anxiety  regarding  the  expiration  and 

^Quong   Tue   Sing   v.   Anglo-He-  40°  Kooistra  v.  Rockford   Ins.   Co., 

vada  Assur.  Corp.,  86  Cal.  566,  10  L.  122  Mich.  626,  81  N.  W.  568  (1900). 

R.  A.  144  (1890).  ^  Hamm  Realty  Co.  v.  New  Hamp- 

388  Healy  v.  Insurance  Co.,  63  N.  Y.  shire  F.  Ins.  Co.,  80  Minn.  139,  83 

Supp.  1055,  50  App.  Div.  (N.  Y.)  327  N.  W.  41  (1900).      See,  also,  s.  c.  87  N. 

(1900).  W.  933    (1901);    Dibble  v.  Northern 

397  Hermann  v.  Niagara  F.  Ins.  Co.,  Assur.  Co.,  70  Mich.  1,  37  N.  W.  704 
100  N.  Y.  411  (1885).  (1888);    Buick  v.  Mechanics' Ins.  Co., 

398  Insurance  Companies  v.  Raden,  103  Mich.  75,  61  N.  W.  337   (1894); 
87  Ala.  311  (1888).  Stone  v.  Franklin  F.  Ins.  Co.,  105 

399  Faulkner     v.     Manchester     F.  N.  Y.  543,  12  N.  B.  45   (1887);  Arn- 
Assur.  Co.,  171  Mass.  349,  50  N.  E.  feld  v.  Guardian  Assur.  Co.,  172  Pa. 
529    (1898).  St.  605,  34  Atl.  580  (1896). 


§    299  THE    STANDARD    POLICY.  302 

replacement  of  risks.  The  long  course  of  business  usage  and  custom 
pursued  with  uniformity  between  the  agency  representing  the  de- 
fendant and  other  companies  and  plaintiff,  in  which  the  latter  had 
permitted  the  former  to  act  for  it,  would  justify  the  conclusion  that 
the  agency  was  authorized  to  act  for  the  plaintiff  in  waiving  notice 
of  cancellation  and  in  accepting  the  new  policy  of  insurance  by  which 
the  delivery  of  such  policy  was  accomplished  as  fully  as  if  the  plain- 
tiff's manager  had  been  present  and  received  such  policy  into  his  own 
hands." 

§  299.  Return  of  premium. — This  provision  relating  to  cancellation 
at  the  instance  of  the  company  requires  that,  in  addition  to  giving 
five  days'  notice,  it  must  return  or  tender  the  unearned  premium  in 
order  to  effect  a  cancellation.  Mere  notice  that  the  unearned  pre- 
mium will  be  returned  by  the  agent  of  the  company  is  not  sufficient.402 
There  must  be  an  actual  return  or  tender  of  the  money.403  A  mere 
request  that  the  policy  be  returned  and  a  promise  to  return  the  pre- 
miums are  not  effective.404  A  tender  of  a  part  of  the  unearned  pre- 
mium, together  with  a  policy  of  insurance  in  another  company  rep- 
resenting the  remainder  of  such  premium,  will  not  terminate  a  policy 
which  provides  for  its  own  termination  upon  the  refunding  or  tender- 
ing back  to  the  insured  of  a  ratable  proportion  of  the  premium  for 
the  unexpired  term  of  the  policy.405  An  attempt  to  rescind  the  con- 
tract is  not  a  cancellation  of  the  policy.  So,  a  tender  of  the  unearned 
premiums  upon  a  policy  and  a  demand  for  its  surrender  for  the  pur- 
pose of  the  rescission  of  the  contract  from  the  beginning,  and  a  re- 
fusal upon  that  ground,  are  not  a  sufficient  tender  to  effect  a  can- 
cellation under  the  terms  of  the  policy.406 

402  Tisdell   v.   New   Hampshire   F.  lingsworth   v.    Gernlania,   etc.,    Ins. 

Ins.  Co.,  155  N.  Y.  163,  49  N.  E.  664  Co.,  45  Ga.  294   (1872);    Peterson  v. 

(1898).     See,  also,  to  the  same  ef-  Hartford   F.   Ins.   Co.,   87   111.   App. 

feet,  Nitsch  v.  American,  etc.,  Ins.  567   (1900). 

Co.,  152  N.  Y.  635,  83  Hun  614,  46  4M  Griffey  v.  New  York,  etc.,  Ins. 

N.  E.  1149  (1897).  Co.,  100  N.  Y.  417  (1885);  Tisdell  v. 

•""^tna   Ins.   Co.   v.   Maguire,   51  New  Hampshire  F.  Ins.  Co.,  155  N. 

111.  342  (1869);  Franklin  F.  Ins.  Co.  Y.  163,  40  L.  R.  A.  765  (1898). 

v.   Massey,   33   Pa.   St.   221    (1859);  ^Quong   Tue    Sing  v.   Anglo-Ne- 

Hathorn  v.   Germania   Ins.   Co.,   55  vada  Assur.  Corp.,  86  Cal.  566,  10  L. 

Barb.    (N.   Y.)    28    (1869);    Goit   v.  R.  A.  144  (1890). 

National,  etc.,  Ins.  Co.,  25  Barb.  (N.  ^  John   R.   Davis  Lumber  Co.   v. 

Y.)  189  (1855);  Peoria,  etc.,  Ins.  Co.  Hartford  F.  Ins.  Co.,  95  Wis.  226,  37 

v.    Botto,    47    111.    516    (1868);    Hoi-  L.  R.  A.  131  (1897). 


303  CANCELLATION    OF    POLICY.  §    300 

The  insured  is  estopped  to  assert  the  non-return  of  the  premium 
after  having  induced  the  company's  agent  to  believe  that  the  cancel- 
lation was  recognized  by  him  without  such  payment.407  The  pro- 
vision requiring  the  return  of  the  unearned  premium  may  be  waived 
or  disregarded  by  the  parties,  and  if  their  minds  meet  upon  an  agree- 
ment that  the  policy  is  canceled  it  is  sufficient.408  A  cancellation  of 
a  policy  which  provides  that  it  may  be  terminated  on  notice  is  ef- 
fective eo  instanti  on  notice  given  in  good  faith  by  the  insurer  where 
no  premium  has  ever  been  paid.409 

§  300.  What  amounts  to  a  cancellation. — The  notice  under  this 
provision  must  be  unequivocal,  as  a  mere  notice  of  a  desire  to  cancel 
or  to  deliver  the  policy  for  cancellation  is  not  sufficient.410  The  no- 
tice must  be  communicated  to  the  insured,  and  it  is  held  in  New 
York  and  California  that  merely  mailing  notice  does  not  effect  a 
cancellation  when  it  was  not  in  fact  received  by  the  insured.411  This 
provision  in  the  standard  policy  is  not  complied  with  by  sending  the 
insured  a  letter  notifying  him  of  an  intention  to  cancel  the  policy 
without  further  notice,  and  stating  that  a  pro  rata  part  of  the  un- 
earned premium  will  be  returned.412  Cancellation  of  the  policy  is 
not  affected  by  the  fact  that  the  insured  was  induced  to  authorize 
its  cancellation  through  mistake  or  misrepresentations  of  his  agent 
concerning  directions  from  the  insurance  company.413  The  mailing 
of  the  policy  with  the  obvious  purpose  of  its  cancellation  to,  and  its 
receipt  by  the  company,  effect  a  cancellation.414 

Where  four  days  before  the  loss  the  company  wrote  a  letter  to  the 
insured  stating  that  the  policy  had  been  canceled  according  to  notice 
given  in  a  former  letter,  it  was  held  that  the  company  was  liable, 
where  it  did  not  appear  that  the  former  notice  had  been  given,  and 

407  Hopkins  v.  Phoenix  Ins.  Co.,  78     147   (1891);  Farnum  v.  Phoenix  Ins. 
Iowa  344  (1889).  Co.,  83  Cal.  246  (1890). 

408  Bingham  v.    Insurance   Co.,  74        413  Tisdell   v.    New    Hampshire    F. 
Wis.  498  (1889).  Ins.  Co.,  155  N.  Y.  163,  40  L.  R.  A. 

""Lipman  v.  Niagara  F.  Ins.  Co.,  765  (1898). 

121  N.  Y.  454,  8  L.  R.  A.  719  (1890).  413  Parker,    etc.,    Mfg.    Co.    v.    Ex- 

410Lyman  v.   State,  etc.,   Ins.   Co.,  change  F.  Ins.  Co.,  166  Mass.  484,  44 

14  Allen    (Mass.)   329    (1867);    Grif-  N.  E.  614   (1896). 

fey  v.  New  York,  etc.,  Ins.  Co.,  100  4U  Ikeller  v.  Hartford  F.  Ins.  Co., 

N.  Y.  417,  53  Am.  Rep.  202  (1885).  53  N.  Y.  Supp.  323,  24  Misc.  (N.  Y.) 

411  Crown  Point  Iron  Co.  v.  ^Etna  136   (1828). 
Ins.  Co.,  127  N.  Y.  608,  14  L.  R.  A. 


§    300  THE    STANDARD    POLICY.  304 

where  there  was  nothing  to  show  an  intention  to  surrender  for  imme- 
diate cancellation.415  Under  a  written  agreement  which  provided 
that  the  policy  should  remain  in  force  from  the  date  of  expiration 
until  discontinuance,  and  the  insured  paid  pro  rata  for  the  time  used, 
it  was  held  that  the  sending  of  a  check  for  an  additional  month's 
insurance  was  not  notice  of  a  discontinuance  at  the  end  of  that 
month.416  When  the  report  of  an  oral  contract  of  reinsurance  was 
received  at  the  office  of  the  company,  the  secretary  called  the  agents 
by  telephone  and  directed  them  to  cancel  such  reinsurance.  The 
agents  delivered  the  message  by  telephone  to  an  assistant  in  the  office 
of  the  company  procuring  the  reinsurance,  and  who  usually  received 
orders  over  the  telephone  both  for  writing  and  canceling  insurance, 
and  it  was  held  sufficient  to  show  that  the  reinsurance,  if  ever  written, 
had  been  canceled.417  In  another  case  it  appeared  that  the  company 
issued  a  policy  to  the  plaintiff  which  provided  that  it  could  be  can- 
celed by  the  company  upon  giving  five  days'  notice.  There  was  a 
provision  that  only  a  pro  rata  premium  should  be  retained  by  the  com- 
pany on  its  cancellation  of  the  policy.  The  special  agent  and  ad- 
juster of  the  company  wrote  the  local  agent,  directing  him  to  cancel 
the  policy.  The  local  agent  wrote  the  insured  requesting  a  return  of 
the  policy,  and  inclosed  two  policies  in  other  companies  in  lieu  of 
the  one  issued  by  the  defendant.  The  letter  was  received  by  the 
insured  on  Saturday  afternoon,  and  on  Saturday  night  the  property 
was  destroyed  by  fire.  The  letter  was  not  opened  'until  Monday 
morning,  and  it  was  held  that  the  letter  and  acts  did  not  constitute 
a  cancellation  of  the  defendant's  policy.418 

A  compan}r  demanded  payment  of  premiums  earned  upon  an  open 
policy,  and  received  a  letter  from  the  insured  stating  that  they  could 
not  "go  on"  unless  the  rate  was  reduced.  The  company  refused  to 
make  a  reduction  and  again  sent  the  bill  asking  that  if  the  insured 
decided  not  to  continue  using  the  policy  that  it  be  returned  to  it. 
The  insured  returned  the  policy  and  check  for  the  amount  of  the 
bill,  saying,  "We  inclose  check  and  policy,  which  we  suppose  will 
conclude  the  whole  matter.  If  we  are  mistaken  please  return  check." 
The  check  was  cashed,  and  it  was  held  that  the  policy  was  rescinded 

416Healy  v.  Insurance  Co.,  63  N.  4"  Manchester  F.  Assur.  Co.  v.  In- 

Y.  Supp.  1055,  50  App.  Div.  (N.  Y.)  surance  Co.,  91  111.  App.  609  (1900). 

327  (1900).  <I8  Partridge  v.  Milwaukee,  etc., 

416  Greenwich  Ins.  Co.  v.  Provi-  Ins.  Co.,  162  N.  Y.  597,  13  App.  Div. 

dence,  etc.,  Co.,  119  U.  S.  481  (1886).  (N.  Y.)  519,  57  N.  E.  1119  (1900). 


305  WAIVER.  §  300 

by  mutual  consent.419  Where  a  policy  contained  a  provision  for 
cancellation  by  the  insurance  company  upon  giving  five  days'  notice 
of  a  surrender  by  the  holder,  the  company  was  held  liable  for  a  loss 
occurring  within  the  five  days.  The  court  said:420  "The  assump- 
tion that  it  was  M.'s  intention  to  assent  to  an  immediate  cancellation 
does  violence  to  his  business  judgment.  He  is  presumed  to  know 
of  plaintiff's  rights  under  the  policy,  and  under  the  circumstances  it 
is  quite  reasonable  to  assume  that  by  sending  the  policy  to  them  he 
intended  nothing  more  than  that  they  should  hold  it  for  cancellation 
under  its  terms.  There  is  a  lack  of  any  circumstances  to  show  an 
intent  to  surrender  for  instant  cancellation.  Every  probability  tends 
the  other  way.  *  *  *  The  absence  of  any  showing  of  an  inten- 
tion to  consent  to  immediate  cancellation  is  fatal  to  the  defendant's 
contention.  Without  such  showing  the  acts  of  the  plaintiff's  agent 
must  be  construed  as  being  in  harmony  with  the  continuance  of  the 
insurance  contract  until  canceled  pursuant  to  its  terms.  The  right 
of  cancellation  does  not  exist  at  all  except  by  contract,  and  stipula- 
tions to  that  effect  are  construed  with  reasonable  strictness." 

XV.     Waiver. 

No  officer.,  agent  or  oilier  representative  of  this  company  shall  have 
power  to  waive  any  provision  or  condition  of  this  policy  except  such 
as  by  the  terms  of  this  policy  may  be  the  subject  of  agreement  in- 
dorsed hereon  or  added  hereto,  and  as  to  such  provisions  and  condi- 
tions no  officer,  agent,  or  representative  shall  have  such  power  or  be 
deemed  or  held  to  have  waived  such  provisions  or  conditions  unless 
such  waiver,  if  any,  shall  be  written  upon  or  attached  hereto,  nor 
shall  any  privilege  or  permission  affecting  the  insurance  under  this 
policy  exist  or  be  claimed  by  the  insured  unless  so  written  or  attached. 

This  company  shall  not  be  held  to  have  waived  any  provision  or 
condition  of  this  policy  or  any  forfeiture  thereof  by  any  requirement, 
act,  or  proceeding  on  its  part  relating  to  the  appraisal  or  to  any  ex- 
amination herein  provided  for.*21 

418  Sea   Ins.    Co.   v.    Johnston,   105  Jersey,   Connecticut,   Rhode   Island, 

Fed.  286,  44  C.  C.  A.  477  (1900).  South     Dakota,      Iowa,     Louisiana, 

420  Wicks  v.    Scottish   Union,   etc.,  North  Dakota,  Michigan,  and  North 
Ins.  Co.,  107  Wis.  606,  83  N.  W.  781  Carolina.        Wisconsin      adds      the 
(1900).  words:     "Up  to  the  time  of  the  de- 

421  This  provision  is  found  in  the  livery  of  this  policy  to  assured,  in 
standard  policies  of  New  York,  New  all  transactions  relating  to  this  pol- 

20 — ELLIOTT  INS. 


§    301  THE    STANDARD    POLICY.  306 

§  301.  Limitations  upon  power  to  waive. — This  provision  limits 
the  authority  of  officers  and  agents  of  the  insurer  to  such  matters 
as  they  are  expressly  authorized  to  waive  by  the  terms  of  the  policy. 
The  general  subject  of  waiver  has  been  discussed  elsewhere  and 
but  little  need  be  added  at  this  time.422  The  prevailing  rule  seems 
to  be  that,  notwithstanding  this  provision,  a  general  agent  of 
the  company  may  waive  this  as  well  as  other  provisions  of  the 
policy.423  Thus,  the  provision  requiring  the  insured  to  keep  books 
showing  purchases  and  sales  in  an  iron  safe,  in  a  policy  which  con- 
tains a  provision  that  no  officer  or  agent  of  the  company  shall  have 
power  to  waive  any  condition  or  provision,  unless  in  writing, 
may  be  waived  by  parol  by  an  agent  having  general  authority  to 
make  contracts  of  insurance.424  It  is  the  settled  rule  that  an  agent 
of  a  fire  insurance  company  may,  by  issuing  a  policy  with  knowledge 
of  facts,  waive  a  condition  that  the  policy  shall  be  void  if  the  property 
insured  be  incumbered  and  the  fact  of  incumbrance  be  not  indorsed 
on  the  policy,  notwithstanding  the  provision  in  the  policy  that  no 
agent  of  the  company  shall  have  power  to  waive  any  such  condition 
except  by  written  indorsement.425  Under  this  provision  the  policy 
was  held  void  on  the  ground  that  the  property  had  been  removed 

icy  or  the  property  herein  insured,  565,   59   N.  E.  309    (1901);    London, 

between  the  assured  and  any  agent  etc.,  Ins.  Co.  v.  Fischer,  92  Fed.  500 

of  the  company,  knowledge  of  the  (1899).    In  German  Ins.  Co.  v.  Ams- 

agent    shall    be    knowledge    of    the  baugh,  8  Kan.  App.  197,  55  Pac.  481 

company;    and    in   all   transactions  (1898),     the     rule     announced     in 

relating  to  the  subject  of  the  insur-  American   Central   Ins.   Co.   v.   Mc- 

ance,  between  the  insured  and  any  Lanathan,  11  Kan.  533   (1873),  and 

agent   of    the    company    after    loss,  Phenix  Ins.  Co.  v.  Hunger,  49  Kan. 

knowledge    of    the    agent    shall    be  178,   30  Pac.  120    (1892),  as  to  the 

knowledge  of  the   company."     The  authority    of    insurance    agents    to 

provision  is  not  found  in  the  stand-  waive  conditions  of  the  policy,  was 

ard    policies    in    use    in    Massachu-  applied,   and   it  was  held   that  the 

setts,    Minnesota,   Maine,   and   New  agent  of  the  company  which  issued 

Hampshire.  the   policy   sued   on   had   authority 

422  See  ch.  ix.  to  waive  the  provision  of  the  policy 

423  Langan   v.   ^Etna    Ins.    Co.,   96  limiting  the  time  within  which  suit 
Fed.  705  (1899).     But  see  Northern  should    be   brought   to    recover   for 
Assur.    Co.    v.    Grand    View    Bldg.  the  loss.     In  Ordway  v.  Continental 
Ass'n  (U.  S.),  22  Sup.  Ct.  133  (1902),  Ins.  Co.,  35  Mo.  App.  426   (1889),  it 
reversing  41  C.  C.  A.  207.  was  said  that  the  settled  policy  of 

^Hanover  F.  Ins.  Co.  v.  Dole,  20     the  state  was  that  an  agent  might 
Ind.  App.  333,  50  N.  E.  772  (1898).         waive    a    stipulation    in    the    policy 
425  Skinner  v.   Norman,  165  N.  Y.     against  concurrent  insurance. 


307  WAIVER.  §  301 

without  the  consent  of  the  company,  although  it  appeared  that  the 
insured  had  informed  the  agent  of  the  company  that  he  was  about 
to  remove  it  to  another  place  of  residence,  and  requested  the  agent 
to  procure  the  consent  of  the  company  in  due  form.  It  also  ap- 
peared that  the  agent  thereafter  returned  the  policy  to  the  insured 
and  informed  him  that  all  the  formalities  had  been  complied  with 
and  that  the  policy  would  cover  the  property  in  the  new  location.426 

The  provision  to  the  effect  that  the  company  shall  not  be  held  to 
have  waived  any  forfeiture  by  any  requirement,  act  or  proceeding 
relating  to  appraisal  is  valid.427  Hence,  where  the  policy  provided 
that  proofs  of  loss  should  be  made  within  sixty  days  after  loss  on 
penalty  of  forfeiture,  it  was  held  that  this  provision  was  not  waived 
by  submitting  the  question  of  the  amount  of  loss  to  appraisers  within 
sixty  days  after  loss.428 


v.  London  Assur.  Corp.,  9  Bass,   90   Tex.   380,   38   S.   W.    1119 

N.  Y.  Supp.  500  (1890),  s.  c.  12  N.  Y.  (1897). 

Supp.  86  (1890).  428Fournier  v.  German,  etc.,  Ins. 

427  See  American,  etc.,  Ins.  Co.  v.  Co.  (R.  I.),  49  Atl.  98  (1901). 


CHAPTER  XII. 


PROVISIONS    OF    THE    STANDARD    POLICY,    CONTINUED. 

B.    PROVISIONS  RELATING  TO  MATTERS  SUBSEQUENT  TO  A  Loss. 


SEC. 

302.  In  general. 

XVI.  Notice  and  Proof  of  Loss. 

303.  Definition — Compliance. 

304.  "Immediate"  notice. 

305.  Separation     of     goods     "forth- 

with." 

306.  Excuses  for  failure  to  furnish 

proofs. 

307.  When  a  condition  precedent. 

308.  What  is  compliance  with  this 

provision. 

309.  Certificate  of  magistrate. 

310.  Plans  and  specifications. 

311.  Waiver. 

312.  To  whom  notice  must  be  given. 


of   Property   and 
-  Examination   of 


XVIII.  Arbitration   of   the  Amount 

of  Loss. 
SEC. 

316.  Disagreement. 

317.  Validity  of  provision. 

318.  Where  there  is  a  total  loss. 

319.  Demand  for  arbitration. 

320.  Condition  precedent. 

321.  Revocation. 

322.  Invalidity  of  the  award. 

323.  Waiver. 

324.  Second    arbitration — Resubmis- 

sion. 

325.  Demand  for  arbitration  as  ad- 

mission of  liability. 

326.  Right  of  mortgagee. 

XIX.  Right  to  Repair,  Rebuild,  or 

Replace. 

327.  An  option  reserved. 

XX.  Time    Within    Which    Loss    is 

Payable. 

328.  In  general. 

XXI.  Time  of  Bringing  Suit. 

329.  Validity. 

330.  Time  when  limitation  begins  to 

run. 

§  302.  In  general. — The  provisions  of  the  insurance  contract  fall 
naturally  into  two  classes  separated  by  the  fact  of  loss.  While  all 
provisions  are  valid  and  binding  upon  the  parties,  they  are  not  for 
purposes  of  construction  treated  as  of  equal  importance.  It  is  ap- 
parent that  matters  required  to  be  done  by  the  insured  after  the 
capital  fact  of  loss  should  not  be  construed  with  the  same  strictness  as 
those  which  define  and  limit  the  terms  of  the  contract  itself.  Hence, 
we  find  that  the  stipulations  treated  of  in  this  chapter  are  more 
liberally  construed  in  favor  of  the  insured,  and  that  the  courts  are 
more  easily  satisfied  of  the  fact  of  a  waiver. 

(308) 


XVII.  Exhibition 
Records 
Party. 

313.  Examination  of  party. 

314.  Failure  to  produce  books. 

315.  The  iron  safe  clause. 


309  NOTICE    AND   PROOF   OF   LOSS.  §    303 

XVI.     Notice  and  Proof  of  Loss. 

If  fire  occur  the  insured  shall  give  immediate  notice  of  any  loss 
thereby  in  writing  to  this  company,  protect  the  property  from  further 
damage,  forthwith  separate  the  damaged  and  undamaged  personal 
property,  put  it  in  the  best  possible  order,  make  a  complete  inventory 
of  the  same,  stating  the  quantity  and  cost  of  each  article  and  the 
amount  claimed  thereon;  and,  within  sixty  days  after  the  fire,  unless 
such  tim<e  is  extended  in  writing  by  this  company,  shall  render  a 
statement  to'  this  company,  signed  and  sworn  to  by  said  insured, 
stating  the  knowledge  and  belief  of  the  insured  as  to  the  time  and 
origin  of  the  fire;  the  interest  of  the  insured  and  of  all  others  in  the 
property;  the  cash  value  of  each  item  thereof  and  the  amount  of  the 
loss  thereon;  all  incumbrances  thereon;  all  other  insurance,  whether 
valid  or  not,  covering  any  of  the  said  property;  and  a  copy  of  all  the 
descriptions  and  schedules  in  all  policies;  any  changes  in  the  title,  use, 
occupation,  location,  possession,  or  exposures  of  said  property  since 
the  issuing  of  this  policy;  by  whom  and  for  what  purpose  any  building 
herein  described  and  the  several  parts  thereof  were  occupied  at  the 
time  of  fire;  and  shall  furnish,  if  required,  verified  plans  and  specifica- 
tions of  any  building,  fixtures,  or  machinery  destroyed  or  damaged; 
and  shall  also,  if  required,  furnish  a  certificate  of  the  magistrate  or 
notary  public  (not  interested  in  the  claim  as  a  creditor  or  otherwise, 
nor  related  to  the  insured)  living  nearest  the  place  of  fire,  stating  that 
he  has  examined  the  circumstances  and  believes  the  insured  has  hon- 
estly sustained  loss  to  the  amount  that  such  magistrate  or  notary  pub- 
lic shall  certify.1 

§  303.  Definition  —  Compliance.  —  By  proof  of  loss  is  meant  such  a 
statement  of  facts,  reasonably  verified,  as,  if  established  in  court, 


provision  is  found  in  the  of  the  insured  therein,  all  other  in- 

standard  policies  of  New  York,  New  surance  thereon,  in  detail,  the  pur- 

Jersey,   Rhode   Island,   Connecticut,  poses  for  which  and  the  persons  by 

Michigan,  Louisiana,  Iowa,  Wiscon-  whom  the  building  insured,  or  con- 

sin,    South   Dakota,   North    Dakota,  tain  ing  the   property   insured,   was 

and  North  Carolina.    Massachusetts,  used,   and   the   time   at  which   and 

Maine  and  New  Hampshire  have  the  manner  in  which  the  fire  originated, 

following   provision:      "In    case    of  so   far   as  known   to  the   insured." 

any  loss  or  damage  under  this  pol-  The  Minnesota  provision  is  similar 

icy,  a  statement  in  writing,  signed  to    that    of    Massachusetts    except 

and  sworn  to  by  the  insured,  shall  that  "in  total  loss  on  buildings,  the 

be  forthwith  rendered  to  the  com-  value  of  the  said  buildings  need  not 

pany,  setting  forth  the  value  of  the,  be  stated." 
property  insured,   and  the  interest 


§    303  THE   STANDARD    POLICY.  310 

will  prima  facie  require  the  payment  of  the  loss.  It  does  not  mean 
some  particular  form  of  proofs  which  the  insurer  arbitrarily  demands.2 
The  proofs  do  not  form  part  of  the  contract  of  insurance;  and  the 
insured  is  not  estopped  from  showing  that  statements  in  his  proofs 
of  loss  were  erroneous  in  so  far  as  they  state  facts  tending  to  annul 
the  policy.3  Nor  is  the  insured  concluded  as  to  the  amount  of  loss  by 
a  statement  in  the  proofs  when  the  company  refuses  to  pay  on  the 
basis  of  that  amount.4  A  misstatement  made  by  the  owner  in  his 
proofs  of  loss,,  through  mistake  and  without  intent  to  defraud,  with 
an  understanding  with  the  adjuster  that  it  may  be  subsequently  cor- 
rected, will  not  prevent  a  recovery.5 

It  is  sufficient  if  this  requirement  of  the  policy  is  substantially  com- 
plied with.6  An  affidavit  describing  the  premises,  stating  the  loss 
and  the  date  thereof,  the  amount  of  damage  and  the  insurance,  and 
that  the  cause  of  the  fire  is  unknown,  is  a  substantial  compliance  with 
the  provision  requiring  proofs  of  loss.7  Under  the  Minnesota  form, 
proofs  of  loss  need  not  contain  a  specific  demand  or  claim  of  a  par- 
ticular amount.  "This  contention/'  said  the  court,8  "is  based  on 
the  theory  that,  as  the  company  has  the  right  to  have  the  amount  of 
its  liability  determined  by  arbitration  in  case  the  parties  do  not  agree 
upon  that  subject,  unless  the  insured  makes  some  specific  claim 

2Jarvis     v.     Northwestern,     etc.,  binding,    but   that   they    should    be 

Ass'n,  102  Wis.  546,  72  Am.  St.  896  given    a    fair    and    reasonable    con- 

(1899).     See,  also,  Insurance  Co.  v.  struction.     A  particular  account  of 

Rodel,  95  U.  S.  232  (1877).  the  loss  or  damage,  etc.,  requires  the 

3  Fowle   v.    Springfield,    etc.,    Ins.  party  only  to  furnish  a  statement  as 
Co.,  122  Mass.  191,  23  Am.  Rep.  308  particular  and  full  as  he  can,  under 
(1877);  McMaster  v.  Insurance  Co.,  the    circumstances,    make.      Hence, 
55    N.    Y.    222,    14    Am.    Rep.    239  where  his  books  and  papers  were  de- 
(1873).  stroyed   by   the   same   fire   that  de- 

4  Corkery  v.  Security  F.  Ins.  Co.,  stroyed   the   insured   property,   and 
99  Iowa  382,  68  N.  W.  792  (1896).  he    is    thus    deprived    of    the    only 

8  Garner    v.    Mutual    F.    Ins.    Co.  means  by  which  he  can  comply  lit- 

( Iowa),  86  N.  W.  289  (1901).  erally   with   the   conditions   of   the 

•Robinson  v.  Palatine  Ins.  Co.  (N.  policy,  a  less  particular  statement  is 
M.),  66  Pac.  535  (1901);  Georgia,  sufficient.  See,  also,  People's  F.  Ins. 
etc.,  Ins.  Co.  v.  Goode,  95  Va.  751,  Co.  v.  Pulver,  127  111.046  (1889). 
30  S.  E.  366  (1898).  In  Bumstead  v.  7  Rochester  Loan,  etc.,  Co.  v.  Lib- 
Dividend,  etc.,  Ins.  Co.,  12  N.  Y.  81,  erty  Ins.  Co.,  44  Neb.  537,  48  Am. 
Woodruff  Ins.  Gas.  185  (1854),  it  is  St.  745  (1895). 

held  that  the  provisions  requiring  s  DeRaiche  v.  Liverpool,  etc.,  Ins. 

proofs  of  loss  and  notice  within  any  Co.  (Minn.),  86  N.  W.  425  (1901). 
designated  time,  are  reasonable  and 


311  NOTICE   AND    PROOF    OF    LOSS.  §    304 

against  the  company,  no  controversy  or  dispute  as  to  the  amount  can 
arise,  and  therefore  the  terms  of  the  policy  with  reference  to  arbitra- 
tion become  inoperative  and  of  no  effect.  The  position  can  not  be 
sustained.  As  stated,  the  proof  of  loss  is  in  literal  compliance  with 
the  terms  of  the  policy  and  contains  every  fact  required  to  be  stated 
therein,  and  can  only  be  held  insufficient  by  judicially  reading  into 
the  terms  of  the  policy  a  provision  that  the  insured  must,  in  addition 
to  the  matters  required  to  be  stated,  also  make  a  specific  claim  as  to 
the  amount  of  the  loss.  A  substantial  compliance  with  the  terms  of 
the  policy  with  respect  to  proof  of  loss  is  uniformly  held  sufficient. 
li  the  matters  and  information  required  to  be  stated  and  given  therein 
are  set  out  in  substance  and  effect,  the  proof  is  sufficient.  We  have 
found  no  case  requiring  the  insured  to  go  beyond  this,  or  to  state 
or  set  forth  any  matters  not  specially  provided  for.  So  the  full 
arswer  to  the  defendant's  contention  is  found  in  the  fact  that  the 
policy  does  not  require  proof  of  loss  to  contain  a  statement  of  the 
amount  claimed,  by  the  insured.  It  is  not  a  question  to  be  reasoned 
out  by  analogy,  but  rather  to  be  determined  from  a  reasonable  inter- 
pretation of  the  policy.  The  fact  that  the  presentation  of  a  specific 
claim  by  the  insured  would  enable  the  company  to  refuse  payment  if 
deemed  excessive,  and  thus  bring  into  operation  the  arbitration  pro- 
visions of  the  policy,  is  no  reason  why  the  court  should  read  into  the 
contract  a  requirement  not  made  a  part  thereof  by  the  parties.  The 
right  to  have  the  amount  of  the  loss  determined  by  arbitration  is  in 
no  measure  obstructed  or  prevented  by  a  failure  on  the  part  of  the 
insured  to  demand  a  specific  sum.  The  company  may,  upon  notice  of 
loss,  investigate  the  fire,  the  extent  of  the  damage  and  loss,  and  make 
such  offer  of  settlement  as  it  may  deem  fair  and  just;  and,  if  the  in- 
sured declines  to  accept  the  same,  an  arbitration  may  then  be  had." 
Whether  notice  is  given  or  proof  served  within  the  time  is  ordinarily 
a  question  to  be  determined  by  the  jury,  but  the  sufficiency  of  the 
proofs  is  a  question  for  the  court.9 

§  304.  "Immediate"  notice. — The  word  "immediate"  in  this  con- 
nection means  such  convenient  time  as  is  necessary  under  the  cir- 
cumstances to  do  the  thing  required.10  It  must  not  be  given  a  literal 

9  Travelers'  Ins.  Co.  v.  Sheppard,  10  Kentzler  v.  American,  etc., 
85  Ga.  751  (1890).  Ace.  Ass'n,  88  Wis.  589  (1894). 


§    304  THE    STANDARD   POLICY.  312 

construction.11  Notice  must  be  given  within  a  reasonable  time — with 
due  diligence.12  A  notice  given  two  days  after  the  loss  is  given  im- 
mediately within  the  meaning  of  this  provision.13  Whether  proofs 
of  loss  are  furnished  within  a  reasonable  time  is  for  the  jury  to  de- 
termine.14- Where  the  plaintiff  omitted  to  give  immediate  notice  of 
loss  as  required,  and  it  appeared  that  the  policy  was  transferred  be- 
fore the  fire  to  the  plaintiff,  and  that  he  had  no  knowledge  of  its  con- 
tents, and  that  he  used  due  diligence  to  discover  the  policy,  which  had 
accidentally  fallen  behind  a  case  of  pigeonholes  in  his  office,  to 
ascertain  what  it  required,  and  that,  notwithstanding  such  diligence, 
he  obtained  neither  the  policy  nor  any  information  as  to  the  notice 
until  fifty  days  after  the  fire,  and  that  notice,  dated  three  days  after 
obtaining  possession  of  the  policy,  was  prepared  and  served  with  due 
diligence,  the  company  receiving  it  three  days  after  its  date,  it  can 
not  be  held,  as  a  matter  of  law,  that  the  service  of  the  notice  was 
not  within  a  reasonable  time.15  An  unexcused  delay  of  eleven  days,16 
and,  in  another  case,  of  forty-eight  days,  has  been  held  fatal.17  So,  a 
failure  for  nearly  sixty  days  after  a  fire  to  give  notice  of  loss  is,  as 
a  matter  of  law,  a  breach  of  the  condition.18  But  in  one  case  a  delay 
of  thirty-five  days  in  making  proof  of  loss  was  excused  under  the  cir- 
cumstances.19 When  loss  occurs  on  October  3,  proofs  of  loss  sent 
the  company  on  December  8  are  not  "forthwith  rendered."20  The 

11  Matthews  v.  American,  etc.,  Ins.  zon    Ins.    Co.,    51    Md.    512,    34   Am. 

Co.,  154  N.  Y.  449,  39  L.  R.  A.  433,  Rep.  323   (1879). 

48  N.  E.  751  (1897);  Pennypacker  v.  I3  Taber  v.  Royal  Ins.  Co.,  124  Ala. 

Capital  Ins.  Co.,  80  Iowa  56,  8  L.  R.  681,  26  So.  252    (1899). 

A.  236  (1890).  "Fletcher    v.    German,    etc.,    Ins. 

"Solomon  v.   Continental  F.   Ins.  Co.,    79    Minn.    337,    82    N.    W.    647 

Co.,  160  N.  Y.  595,  73  Am.  St.  707,  (1900). 

46  L.  R.  A.  682  (1899).    As  to  what  "Solomon  v.   Continental   F.   Ins. 

constitutes  compliance  with  a  pro-  Co.,  160  N.  Y.  595,  73  Am.  St.  707 

vision     requiring     "immediate     no-  (1899). 

tice,"  see  cases  collected  in  note  to  10  Trask  v.  State,  etc.,  Ins.  Co.,  29 

Phenix  Ins.  Co.  v.  Pickel,  12  Am.  St.  Pa.  St.  198,  72  Am.  Dec.  622  (1858). 

404    (1889).     See,   also,   Bennett  v.  "Brown  v.  London  Assur.  Corp., 

Lycoming,    etc.,    Ins.   Co.,   67   N.   Y.  40  Hun  (N.  Y.)  101  (1886). 

274   (1876);   Kimball  v.  Howard  F.  1S  Ermentrout  v.  Girard,  etc.,  Ins. 

Ins.  Co.,  8  Gray  (Mass.)  33  (1857);  Co.,   63   Minn.   305,   56  Am.   St.   481 

Kingsley  v.  New  England,  etc.,  Ins.  (1895). 

Co.,    8    Gush.    (Mass.)    393    (1851);  "Knickerbocker    Ins.    Co.   v.   Mc- 

People's   Ace.    Ass'n    v.    Smith,    126  Ginnis,  87  111.  70  (1877). 

Pa.  St.  317   (1889);   Rokes  v.  Ama-  =°  Parker  v.  Farmers',  etc.,  Ins.  Co. 

(Mass.),  61  N.  E.  215  (1901). 


313  NOTICE    AND    PROOF    OF    LOSS.  §    305 

company  was  held  to  have  received  timely  notice  of  loss,  where  the 
policy  required  immediate  written  notice,  where  its  local  agent  knew 
of  the  fire  and  had  several  conversations  with  the  insured,  who  made 
a  verbal  claim  of  loss,  and  thereafter  the  agent  wrote  the  company, 
which,  ten  days  after  the  fire,  sent  out  an  adjuster,  and  final  proofs 
of  loss  were  sent  to  the  defendant,  who  retained  them  without  com- 
ment.21 So,  where  a  general  agent  of  the  company,  on  the  day  of 
the  loss,  notified  the  company  of  the  loss,  and  within  a  few  days  there- 
after the  company  sent  an  adjuster  with  power  to  investigate,  adjust 
and  settle  the  loss,  it  was  held  that  the  requirement  of  immediate 
notice  had  been  complied  with.22  It  has  been  held  that  notice  by 
p'arol  to  an  agent  of  the  insurance  company  is  of  no  effect  where  the 
charter  contains  a  condition  that  notice  must  be  given  in  writing  to 
the  secretary  or  one  of  the  directors.23  The  policy  sometimes  requires 
that  notice  shall  be  given  "forthwith."  This  word  is  given  the  same 
construction  as  "immediate,"  and  requires  that  the  notice  be  given 
with  due  diligence — within  a  reasonable  time  and  without  unnecessary 
delay.24  Hence,  whether  a  statement  is  rendered  "forthwith"  depends 
upon  all  the  circumstances,  and  is  for  the  jury  to  determine.23  A 
failure  to  render  such  statement  until  about  two  months  after  the 
fire  is  not  necessarily  a  failure  to  render  it  "forthwith,"  if  the  delay 
is  accounted  for  by  the  ill  health  of  the  assured,  the  confusion  at- 
tending the  fire,  and  other  such  obstructions.26 

§  305.    Separation  of  goods  "forthwith." — After  giving  immediate 
notice  of  the  loss  to  the  company  the  insured  must  proceed  "forth- 

21  Partridge  v.  Milwaukee,  etc.,  Ins.  (1890);    St.  Louis  Ins.  Co.  v.  Kyle, 

Co.,  13  App.  Div.    (N.  Y.)    519,  162  11  Mo.  278,  49  Am.  Dec.  74   (1848); 

N.  Y.  587,  57  N.  E.  1119  (1900).  Griffey  v.  New  York,  etc.,  Ins.  Co., 

22Kahn  v.  Traders'  Ins.  Co.,  4  Wyo.  100  N.  Y.  417   (1885);  Mason  v.  St. 

419,  62  Am.  St.  47  (1893).  Paul,  etc.,  Ins.  Co.,  82  Minn.  336,  85 

28  Patrick  v.  Farmers'  Ins.  Co.,  43  N.    W.    13     (1901);    Whitehurst    v. 

N.  H.  621,  80  Am.  Dec.  197   (1862).  North    Carolina,    etc.,    Ins.    Co.,    7 

In  Ermentrout  v.  Girard,  etc.,  Ins.  Jones  (N.  C.)  433,  78  Am.  Dec.  246 

Co.,   63   Minn.   305,   56   Am.   St.   481  (1860). 

(1895),   it  was  held  that  notice  to  23  Harnden  v.  Milwaukee,  etc.,  Ins. 

the  local   agent  was  not  notice   to  Co.,  164  Mass.  382,  49  Am.  St.  467 

the  company.  (1895). 

24  Central  City  Ins.  Co.  v.  Gates,  86  -r'  Harnden  v.  Milwaukee,  etc.,  Ins. 

Ala.  558,  11  Am.  St.  67  (1888).     See  Co.,  164  Mass.  382,  49  Am.  St.  467 

also,    Pennypacker    v.    Capital    Ins.  (1895). 
Co.,    80    Iowa    56,    20    Am.    St.    395 


§    306  THE    STANDARD    POLICY.  314 

with"  to  separate  the  damaged  from  the  undamaged -personal  prop- 
erty. "Forthwith,"  like  immediate,  means  with  due  diligence  under 
all  the  circumstances.27 

§  306.  Excuses  for  failure  to  furnish  proofs. — The  courts  recog- 
nize the  fact  that  these  stipulations  with  relation  to  what  should  be 
done  after  loss  should  not  be  construed  with  the  same  strictness  as 
those  which  constitute  the  essential  conditions  of  the  contract.  Hence, 
there  may  be  circumstances  which  will  excuse  a  failure  to  make 
proofs  of  loss  as  required  by  the  policy.  Thus,  the  insanity  of  the 
insured  is  a  sufficient  excuse  for  not  making  proofs  of  loss  within 
the  specified  time.28  As  said  in  a  recent  case  in  Xew  York  :29  "It  is 
well  settled  that  when  the  liability  has  become  fixed  by  the  capital 
fact  of  loss  within  the  range  of  the  responsibility  assumed  in  the 
contract,  the  courts  are  reluctant  to  deprive  the  insured  of  the  benefit 
of  the  liability  by  any  narrow  or  technical  construction  of  the  condi- 
tions and  stipulations  which  prescribe  the  formal  requisites  by  means 
of  which  this  accrued  right  is  to  be  made  available  for  his  indemnifica- 
tion. While  it  is  true  that  the  policy  in  suit  contained  the  usual 
clause  as  to  proofs  of  loss  being  filed  within  sixty  days,  and  that  no 
officer,  agent  or  other  representative  of  the  "company  should  have 
power  to  waive  any  condition  thereof,  except  by  a  written  agreement 
indorsed  thereon,  yet  a  party  to  a  contract  containing  such  a  provision 
ma}T,  by  conduct,  estop  himself  from  enforcing  it  against  one  who  has 
acted  in  reliance  upon  such  conduct.  He  may  also  be  estopped  by 
the  act  of  an  agent  who  possesses,  or  whom  he  has  held  out  to  possess, 
this  power  in  respect  to  the  provision." 

Failure  to  comply  with  this  provision  does  not  defeat  the  claim 
of  a  beneficiary  when  he  does  not  know  of  the  existence  of  the  policy, 
or  of  the  death  of  the  insured,  until  more  than  a  year  thereafter,  and 
then  notifies  the  company  at  once  after  acquiring  such  knowledge.30 
The  policy  requires  that  the  proof  shall  be  made  and  signed  by  the 

27  Fletcher    v.    German,    etc.,    Ins.  ^  Sergent  v.   Liverpool,   etc.,   Ins. 
Co.,    79    Minn.    337,    82    N.    W.    647  Co.,    155    N.    Y.    349,    49    N.    E.    935 
(1900).     See  cases  cited  in  previous  (1898);  McNally  v.  Phoenix  Ins.  Co., 
section.  137  N.  Y.  389,  33  N.  E.  475  (1893); 

28  Insurance  Companies  v.  Boykin,  Bishop  v.  Agricultural  Ins.  Co.,  130 
12     Wall.      (U.     S.)      433      (1870);  N.  Y.  488,  29  N.  E.  844  (1891). 
Wheeler    v.    Connecticut,    etc.,    Ins.  30  McElroy  v.  John  Hancock,  etc., 
Co.,  82  N.  Y.  543,  37  Am.  Rep.  594  Ins.  Co.,  88  Md.  137,  71  Am.  St.  400 
(1880).  (1898). 


315  NOTICE   AND   PROOF    OF    LOSS.  §    307 

insured,  but  when  he  is  not  in  a  position  personally  to  comply  with 
this  requirement  it  may  be  done 'by  his  agent.31  Thus,  where  the  in- 
sured at  the  time  is  out  of  the  state,  the  proofs  may  be  signed  by  his 
agent.32  The  provision  must  be  given  a  reasonable  construction.  So, 
where  the  insured  dies,  the  right  to  indemnity  is  not  lost  by  a  failure 
to  comply  with  the  provision  literally,  owing  to  such  death  and  the 
absence  of  persons  qualified  to  give  such  notice  and  make  such  proofs. 
Upon  the  death  of  the  insured  it  is  the  duty  of  those  interested  to  use 
every  reasonable  effort  to  comply  with  the  provision.  Where  no  ex- 
ecutor has  been  appointed  because  of  the  contest  of  a  will,  the  heirs  or 
next  of  kin  should,  within  a  reasonable  time,  give  notice  of  the  loss  and 
make  the  proof  provided  for  in  the  policy,  or  procure  the  appoint- 
ment of  a  special  or  temporary  administrator  to  do  so.  Where  this 
was  not  done,  and  where  no  notice  of  loss  was  given  until  more  than 
two  years  after  the  death  of  the  insured,  the  company  was  held  to 
have  been  relieved  from  liability.33 

WTiere  the  insured  returned  the  proofs  of  loss,  signed  and  sworn 
to  by  his  attorney  in  fact,  and  gave  as  a  reason  therefor  the  fact 
that  such  attorney  negotiated  the  policy  and  lived  in  the  property, 
and  that  the  insured  was  sick  and  not  able  to  execute  the  power  of 
attorney  before  a  justice,  it  was  held  that  the  insured  had  not  shown 
a  sufficient  excuse  for  not  signing  and  swearing  to  the  proofs  him- 
self, and  that  therefore  he  could  not  maintain  an  action  on  the 
policy.34  The  fact  that  the  insured  was  occupied  with  other  business 
and  forgot  to  give  notice  is  not  a  sufficient  excuse.35 

§  307.  When  a  condition  precedent. — Where  the  policy  does  not 
provide  that  a  failure  to  furnish  proofs  of  loss  within  the  stipulated 
time  shall  operate  as  a  forfeiture,  it  is  generally  held  that  the  policy 
is  not  invalidated  by  such  failure.36  In  such  case  a  failure  to  furnish 

31  Lumbermen's,    etc.,    Ins.    Co.    v.  ^  Smith,  etc.,  Co.  v.  Travelers'  Ins. 
Bell,    166    111.    400,    57   Am.    St.    140  Co.,    171    Mass.    357,    50    N.    E.    516 
(1897).  (1898).     See  also,  Harnden  v.  Mil- 

32  Walsh  v.  Vermont,  etc.,  Ins.  Co.,  waukee,  etc.,  Ins.  Co.,  164  Mass.  382, 
54  Vt.  351   (1882).  41  N.  E.  658  (1895). 

33  Matthews  v.  American,  etc.,  Ins.  30  Orient  Ins.  Co.  v.  Clark,  22  Ky. 
Co.,  154  N.  Y.  449,  61  Am.  St.   627  L.  1066,  59  S.  W.  863  (1900);  North- 
(1897).  ern   Assur.   Co.   v.    Hanna,   60   Neb. 

MKowicz  v.  Teutonia  Ins.  Co.  29,  82  N.  W.  97  (1900);  Flatley  v. 
(Pa.  Com.  PI.),  30  Pittsb.  Leg.  J.  Phenix  Ins.  Co.,  95  Wis.  618,  70  N. 
140.  W.  828  (1897). 


§    307  THE    STANDARD   POLICY.  316 

proof  of  loss  within  the  required  time  does  not  forfeit  the  policy  if 
the  proofs  are  furnished  before  the  expiration  of  the  time  for  bringing 
an  action.37  The  supreme  court  of  Minnesota,  in  a  recent  case,  said:38 
"It  is  very  generally  held  by  the  authorities,  in  cases  where  this  ques- 
tion has  been  presented,  that  unless  the  policy  provides  for  a  forfeiture, 
or  makes  the  service  of  proofs  of  loss  within  the  time  specified  therein 
a  condition  precedent  to  the  liability  of  the  company,  the  time  within 
which  such  proofs  are  required  to  be  furnished  is  not  of  the  essence  of 
the  contract.  Where  no  forfeiture  is  provided  by  the  terms  of  the 
contract,  and  the  service  of  the  proofs  of  loss  within  the  specified  time 
is  not  made  a  condition  precedent  to  the  liability  of  the  company,  the 
effect  of  such  failure  is  simply  to  postpone  the  day  of  payment.  No 
liability  attaches  to  the  company,  however,  until  such  proofs  are  fur- 
nished; but,  unless  otherwise  provided,  expressly  or  by  fair  implica- 
tion, it  is  not  important  that  proofs  be  not  in  fact  seryed  within  the 
time  stated  in  the  polic}r.39  It  has  been  held  by  this  court  that  a  fail- 
ure of  strict  compliance  with  similar  provisions  in  the  policies  there 
under  consideration  was  a  condition  precedent  to  the  company's  liabil- 
ity, but  such  policies  contained  express  provisions  to  that  effect,  and 
the  decisions  there  made  are  based  on  that  fact."40  Where  the  policy 
provides  that  the  loss  shall  not  be  payable  until  sixty  days  after 
proofs  of  loss  have  been  furnished,  and  that  no  suit  on  the  policy  can 
be  commenced  within  twelve  months  after  the  fire,  the  insured  must 
submit  his  proofs  of  loss  in  time  for  sixty  days  to  elapse  between 
the  time  when  they  were  furnished  and  the  expiration  of  the  twelve 

37  American,  etc.,  Ins.  Co.  v.  Heav-  (1892);    Kenton  Ins.  Co.  v.  Downs, 
erin,   18   Ky.   L.   190,   35   S.   W.   922  90   Ky.    236,    13    S.   W.    882    (1890); 
(1896).  Sun  Mut.   Ins.  Co.  v.  Mattingly,  77 

38  Mason  v.  St.  Paul,  etc.,  Ins.  Co.,  Tex.  162, 13  S.  W.  1016  (1890);  Kahn- 
82  Minn.  336,  85  N.  W.  13    (1901).  weiler  v.  Phoenix  Ins.  Co.,  57  Fed.  562 

39  2  May  Ins.   (4th  ed.)  1097,  note  (1893);     Southern    F.    Ins.    Co.    v. 
a;    Coventry  v.  Evans,   102   Pa.   St.  Knight,   111   Ga.    622,   36   S.   B.   821 
281    (1883);    Carpenter  v.   German,  (1900). 

etc.,  Ins.  Co.,  52  Hun   (N.  Y.)   249,  40  See  Bowlin  v.  Hekla  F.  Ins.  Co., 

4    N.    Y.    Supp.    925     (1889);    Van-  36  Minn.  433,  31  N.  W.  859   (1887);  ' 

gindertaelen  v.  Phenix  Ins.  Co.,  82  Shapiro  v.  Western,  etc.,   Ins.   Co., 

Wis.    112,    51    N.    W.    1122    (1892);  51  Minn.  239,  53  N.  W.  463   (1892); 

Rynalski  v.  Insurance  Co.,  96  Mich.  Shapiro  v.   St.   Paul,  etc.,   Ins.  Co., 

395,  55  N.  W.  981   (1893);  Northern  61  Minn.  135,  63  N.  W.  614   (1895); 

Assur.  Co.  v.  Hanna,  60  Neb.  29,  82  Ermentrout  v.  Girard,  etc.,  Ins.  Co., 

N.  W.  97  (1900);  Steele  v.  German  63  Minn.  305,  65  N.  W.  635  (1895). 
Ins.  Co.,  93  Mich.  81,  53  N.  W.  514 


317  NOTICE   AND   PROOF   OF    LOSS.  §    308 

months'  limitation.41  Where  the  policy  contained  this  provision 
and  a  further  statement  that  no  suit  or  action  on  the  policy  for  the 
recovery  of  any  claim  should  be  sustainable  in  any  court  of  law  or 
equity  until  full  compliance  by  the  assured  with  this  requirement, 
the  court  said:42  "Under  the  stipulations  in  the  policy  there  can  be 
no  question  that,  as  a  condition  precedent  to  the  payment  of  the  loss, 
the  proofs  of  loss  should  be  submitted  to  the  company  within  the  time 
prescribed.  The  sufficiency  of  the  proofs  on  the  trial  of  the  case  is 
a  question  for  the  court,  and  to  be  sufficient  they  should  show  a  loss 
within  the  terms  of  the  policy."  Although  a  failure  to  make  proofs 
of  loss  within  the  stipulated  time  does  not  cause  a  forfeiture  of  the 
policy,  it  is  necessary  that  proofs  be  submitted  before  an  action  can  be 
maintained.43 

§  308.  What  is  compliance  with  this  provision. — Notice  to  an 
agent  of  the  company  a  day  or  so  after  the  loss  occurs,  with  a  request 
that  he  notify  his  principal,  is  immediate  notice.44  The  requirement 
that  a  statement  shall  be  "rendered"  to  the  company  within  a  speci- 
fied time  is  complied  with  by  mailing  a  statement  to  the  company 
within  the  time.45  Where  there  was  proof  of  mailing  the  notice  and 
proofs  of  loss,  properly  stamped  and  addressed,  to  the  insured,  which 
was  opposed  by  declarations  of  the  company's  officers  and  clerks  to  the 
effect  that  the  documents  were  never  received,  it  was  held  that  there 
was  a  question  for  the  jury  to  determine.46  It  is  sufficient  if  the 

41  Southern  F.  Ins.  Co.  v.  Knight,  Co.  v.  Zeitinger,  168  111.  286,  61  Am. 

Ill  Ga.  622,  36  S.  E.  821,  78  Am.  St.  St.  105  (1897);  Whitmore  v.  Dwell- 

216  (1900).  ing  House  Ins.  Co.,  33  Am.  St.  842 

"Cannon  v.  Phoenix  Ins.  Co.,  110  (1892),  note.  Under  Iowa  code, 

Ga.  563,  78  Am.  St.  124  (1900).  par.  23,  §  48,  providing  that  in  com- 

43  German  Ins.  Co.  v.  Fairbank,  32  puting  time,  if  the  last  day  falls  on 
Neb.   750,    29   Am.    St.   459    (1891);  Sunday,   the   prescribed   time   shall 
Western,  etc.,  Ins.  Co.  v.  Thorp,  48  be   extended    so   as   to   include   the 
Kan.  239,  28  Pac.  991   (1892).  whole  of  the  following  Monday,  a 

44  Burlington  Ins.   Co.  v.  Lowery,  proof  of  loss  mailed   on   Saturday, 
61  Ark.  108,  54  Am.  St.  196  (1895);  the  last  day  for  making  the  same 
Hoffecker  v.  New   Castle,  etc.,   Ins.  being  Sunday,  and  received  by  the 
Co.,  5  Houst.  (Del.)  101  (1875).  insurance  company  on  Monday,  was 

45  Susquehanna,    etc.,    Ins.    Co.    v.  in  time:     McKibban  v.  Des  Moines 
Tunkhannock   Toy   Co.,    97    Pa.    St.  Ins.     Co.     (Iowa),     86     N.     W.     38 
424,  39  Am.  Rep.  816  (1881);  Badger  (1901). 

v.  Glens  Falls  Ins.  Co.,  49  Wis.  389  40  Pennypacker  v.  Capital  Ins.  Co., 
(1880);  Manufacturers',  etc.,  Ins.  80  Iowa  56,  8  L.  R.  A.  236  (1890). 


308 


THE    STANDARD    POLICY. 


318 


proofs  are  mailed  within  the  time,  although  they  are  not  received  by 
the  company  until  after  the  expiration  of  the  period.  "It  is  said  that 
the  clause  in  the  policy,  'shall  render  a  statement  to  the  company/ 
means,  shall  render  a  statement  to  the  company  at  its  office;  that  the 
word  'render5  has  a  different  signification  from  'forward'  or  'mail;' 
and  that  the  policy  required  the  proofs  to  be  actually  delivered  to  the 
company  at  its  own  office  within  sixty  days.  We  think  such  an  inter- 
pretation of  this  provision  too  narrow  and  strained."47  But  in  New 
York  it  is  held  that  the  proofs  of  loss  must  be  mailed  so  that  they  may 
be  received  by  the  insurer  within  the  time  fixed  by  the  policy.48  Send- 


"  Manufacturers',  etc.,  Ins.  Co.  v. 
Zeitinger,  168  111.  286,  48  N.  E.  179 
(1897);  Pennypacker  v.  Capital  Ins. 
Co.,  80  Iowa  56,  8  L.  R.  A.  236 
(1890). 

48  In  Peabody  v.  Satterlee,  166  N. 
Y.  174,  59  N.  B.  818,  52  L.  R.  A. 
956  (1901),  the  court  said:  "A 
proper  reading  of  the  provision  of 
the  policy  is  that  the  insured  is  to 
furnish  or  deliver  to  the  defendants 
these  proofs  of  loss,  and  this  clearly 
means  that  the  papers  shall  be  so 
furnished  to  the  defendants  person- 
ally, or  to  their  duly  authorized 
agent,  if  they  have  one.  In  cases 
of  this  kind  substituted  service,  or 
service  by  mail,  is  either  matter  of 
statute  or  contract.  In  this  case 
the  contract  is  silent,  and  the  de- 
positing of  the  proofs  of  loss  in 
the  mail  at  Buffalo  on  the  sixtieth 
day  after  the  fire  occurred  can  not 
be  held  a  compliance  with  the  pro- 
visions of  the  policy.  This  view 
was  adopted  by  the  trial  court,  but 
the  appellate  division  reversed  the 
judgment  and  ordered  a  new  trial. 
The  opinion  of  the  appellate  di- 
vision, in  part,  is  as  follows: 
'While  there  are  numerous  cases  re- 
ported in  which  it  is  held  that  it  is 
necessary  to  comply  with  the  pro- 
visions of  the  clause  requiring  that 
proofs  of  loss  shall  be  rendered 


to  the  attorneys  of  the  underwriters 
within  sixty  days  of  a  fire  as  a 
condition  precedent  to  the  right  of 
recovery,  we  are  unwilling  to  say 
as  a  matter  of  law  that,  where  the 
plaintiff  has  complied  with  all  the 
requirements  of  the  policy  within 
the  time  given  him  by  its  terms  to 
act,  and  deposited  it  in  the  mails, 
he  has  forfeited  his  right  to  main- 
tain an  action  for  the  recovery  of 
the  insurance  for  which  he  has  paid 
the  premiums.'  The  very  question 
to  be  decided  at  this  time  is  whether 
the  plaintiff  has  complied  with  all 
the  requirements  of  the  policy  with- 
in the  time  given  him  by  its  terms. 
If  he  has,  he  should  recover;  and, 
if  he  has  not,  this  court,  in  decid- 
ing against  him,  declares  no  for- 
feiture of  his  legal  rights,  but  con- 
strues a  written  contract  according 
to  its  plain  provisions.  Policies  of 
fire  insurance  have  been  before  us 
many  times  for  construction,  and 
we  have  given  effect  to  their  pro- 
visions without  regard  to  the  fact 
that  in  the  particular  case  it  seemed 
to  impose  hardship  and  loss  upon 
either  the  insurer  or  the  insured: 
Blossom  v.  Lycoming  F.  Ins.  Co.,  64 
N.  Y.  162;  Quinlan  v.  Providence, 
etc.,  Ins.  Co.,  133  N.  Y.  356,  364,  365, 
31  N.  E.  31;  McAllaster  v.  Niagara 
F.  Ins.  Co.,  156  N.  Y.  80,  50  N.  E. 


319  NOTICE   AXD   PROOF   OF    LOSS.  §    309 

ing  the  estimates  of  carpenters  as  to  what  the  building  destroyed  would 
cost  is  not  furnishing  proofs  of  loss.49  A  statement  which  describes  in 
general  terms  the  merchandise  destroyed,  and  alleges  that  it  was 
owned  by  the  insured,,  and  was  of  a  specified  value,  and  further  states 
that  the  origin  of  the  fire  is  unknown,  but  is  supposed  to  have  been 
caused  b}'  a  flue,  sufficiently  complies  with  a  statute  which  requires 
the  insured  to  state  the  facts  as  to  how  the  loss  occurred  so  far  as 
within  his  knowledge,  and  the  extent  of  the  loss,  although  such  proof 
does  not  meet  the  requirements  of  the  policy.50  So,  a  written  notice, 
accompanied  by  an  affidavit  stating  that  the  origin  of  the  fire  is  un- 
known to  the  insured,  and  that  the  loss  is  total,  entire  and  complete, 
satisfies  the  provision  in  the  policy  which  requires  "satisfactory" 
proofs  of  loss,  as  well  as  this  statute.51 

§  309.  Certificate  of  magistrate. — The  courts  have  generally  sus- 
tained the  validity  of  the  requirement  that  the  insured  shall  furnish, 
when  required,  a  certificate  of  a  magistrate  or  notary  public  living 
nearest  the  place  of  the  fire  stating  that  he  has  examined  the  cir- 
cumstances and  believes  the  insured  has  honestly  sustained  loss  to 
the  amount  certified/'2  But  the  insured  is  under  no  obligation  to 

502.  The  use  of  the  standard  pol-  manner  of  rendering  proofs  of  loss 
icy  in  this  state  was  made  compul-  than  that  plaintiff  should  recover 
sory  in  order  to  protect  both  parties  in  this  particular  case.  The  duty  of 
to  the  contract  of  insurance  from  the  court  in  the  premises  is  in  no 
unnecessary  and  wasting  litigations  way  affected  by  the  fact  that  the  de- 
over  questions  having  their  origin  fendants  have  seen  fit  to  avail 
in  the  varying  forms  of  policies  is-  themselves  of  a  technical  defense." 
sued  by  the  different  companies.  It  *  Heusinkveld  v.  St.  Paul,  etc., 
is  important  alike  to  the  insurer  and  Ins.  Co.,  96  Iowa  224,  64  N.  W.  769 
insured  that  the  standard  policy  (1895). 

should  be  fairly  construed,  in  order  ^Warshawky  v.  Anchor,  etc.,  Ins. 

that  an  instrument  which  came  from  Co.,    98    Iowa    221,    67    N.    W.    237 

the  hands  of  its  creators  presenting  (1896). 

many  questions  for  construction  be  51  Parks  v.  Anchor,  etc.,  Ins.  Co., 

rendered    clear    and    easily    under-  106  Iowa  402,  76  N.  W.  743   (1898). 

stood.     In  the  case  at  bar  the   in-  52  Lane  v.  St.  Paul,  etc.,  Ins.  Co., 

sured    had    nearly   three    weeks    in  50    Minn.    227,    Woodruff    Ins.    Gas. 

which   to   correct   his   proofs   after  188   (1892).     The  Minnesota  statute 

they  were  returned  by  the  defend-  now   forbids  the   insertion,  of   this 

ants,  and  it  is  due  solely  to  his  own  clause  in  a  policy.     See,  also,  Wors- 

negligence  that  they  did  not  reach  ley  v.  Wood,  6  Term  R.  710  (1796); 

the    company    in    time.     It    is    far  London  Guarantee  Co.  v.  Fearnley, 

more   important  that  there   should  L.  R.  5  App.  Gas.  916   (1880). 
be  a  clear  and  settled  rule  as  to  the 


§    310  THE   STANDAED   POLICY.  320 

furnish  the  certificate  unless  requested  to  do-  so,  and  a  mere  notice  to 
him  to  comply  with  the  conditions  of  the  policy  is  not  notice  to  fur- 
nish this  certificate.  The  request  must  be  made  before  suit  is  brought 
to  recover  the  amount  of  the  loss.53  Courts  will  not  attach  much 
importance  to  slight  differences  in  distance  between  different  no- 
taries.54 Where  the  certificate  furnished  was  that  of  a  notary  re- 
siding within  four  hundred  feet  of  the  fire,  and  it  appeared  that  there 
was  another  notary  who  lived  nearer,  and  the  defect  was  not  pointed 
out  by  the  defendant  until  after  the  commencement  of  the  suit,  it 
was  held  that  it  was  too  late  to  make  the  objection.55  It  was  held  in 
Illinois  that  the  certificate  of  a  magistrate  as  to  the  amount  of  the 
loss  is  not  conclusive  on  the  insured,  and  that  a  party  may,  notwith- 
standing such  certificate,  show  the  true  amount  of  the  loss.56  In 
some  states  the  insertion  of  this  provision  in  the  policy  is  forbidden 
by  statute,  and  in  others  it  is  held  void  and  unenforceable.57 

§  310.  Plans  and  specifications. — The  requirement  that  the  in- 
sured shall,  if  required,  furnish  verified  plans  and  specifications  of  any 
buildings  or  fixtures  destroyed  or  damaged  is  reasonable  and  must 
be  complied  with.  Where  the  company  requests  the  insured  to  make 
out  plans  and  specifications  and  hold  and  deliver  the  same  to  a  com- 
mon adjuster  of  itself  and  other  companies,  it  thereby  waives  the 
presentation  of  the  plans  and  specifications  to  itself.58 

§  311.  Waiver. — If  the  company  objects  to  the  proofs  of  loss  on 
technical  grounds  it  must  specify  the  particular  defect,  if  it  is  one 
which  may  be  remedied,  or  it  will  be  held  to  have  waived  the  defect. 
Where  a  party  in  good  faith  attempts  to  make  proofs  of  loss,  the 
failure  of  the  company  to  make  any  objection  to  the  proofs  is  suffi- 
cient to  constitute  a  waiver.59  "The  law  is  settled  that  where  the 
assured,  in  attempting  in  good  faith  to  comply  with  the  terms 

63  Moyer  v.  Sun  Ins.  Office,  176  Pa.  °°  Birmingham  F.  Ins.  Co.  v.  Pul- 

St.  579,  53  Am.  St.  690  (1896);  John-  ver,    126    111.    329,    9    Am.    St.    598 

son  v.  Phoenix  Ins.  Co.,   112  Mass.  (1888);  Kelly  v.  Sun  Fire  Office,  141 

49,   17   Am.   Rep.   65    (1873);    Lead-  Pa.  St.  10,  23  Am.  St.  254  (1891). 

better  v.  Etna  Ins.  Co.,  13  Me.  265,  6T  German,  etc.,  Ins.  Co.  v.  Norris, 

29  Am.  Dec.  505  (1836).  100  Ky.  29   (1896). 

84  Williams  v.  Niagara  F.  Ins.  Co.,  M  Brownfield    v.    Mercantile,    etc., 

50  Iowa  561  (1879).  Ins.  Co.,  84  Mo.  App.  134  (1900). 

M  Barnum   v.    Merchants'    F.    Ins.  59  Moyer  v.  Sun  Ins.  Office,  176  Pa. 

Co.,  97  N.  Y.  188  (1884).  St.  579,  53  Am.  St.  690  (1896). 


321  NOTICE  AND  PROOF  OF  LOSS.  §  311 

of  the  policy,  furnishes  to  the  insurance  company  within  the  time 
stipulated  what  purports  and  is  intended  to  be  proofs  of  loss,  the  com- 
pany must  point  out  particularly  any  defects  therein  if  it  intends  to 
rely  upon  them.  If  it  fails  to  do  so,  objection  can  not  thereafter  be 
made  to  its  sufficiency."60  The  mere  silence  of  an  agent  or  manager 
of  the  company  after  receiving  proofs  of  loss  is  a  waiver  of  the  right 
to  require  further  proofs.61 

The  company  waives  compliance  with  this  provision  of  the  policy 
by  waiting  until  but  two  or  three  days  are  left  within  the  limit,  and 
then  demanding  of  the  insured,  indiscriminately,  proofs  which  he  was 
unconditionally  required  to  furnish,  and  those  which  he  was  not  re- 
quired to  furnish  unless  demanded,  and  failing  to  state  that  he  had 
less  time  to  furnish  the  former  than  the  latter,  and  that  a  failure  to 
furnish  the  former  within  the  time  limited  would  result  in  a  forfeit- 
ure.62 Where  the  company  denies  all  liability  it  is  not  necessary  to 
furnish  proofs  of  loss.63  This  is  true  where  the  denial  is  made  to 
a  third  person  during  the  period  prescribed  for  making  the  proofs, 
if  the  fact  of  such  denial  comes  to  the  knowledge  of  the  insured.04 
But  the  fact  that  the  insurer,  when  denying  its  liability  on  the  policy 
and  insisting  that  it  was  void,  at  the  same  time  objected  to  the  proofs 
of  loss,  does  not  amount  to  a  waiver  of  the  forfeiture.65  An  ad- 
juster, by  agreeing  to  accept  the  estimate  of  a  third  person  as  to  the 
amount  of  the  loss,  waives  the  proofs  of  loss  required  under  the 
policy.66  Where  the  company  holds  the  proofs  without  objection 
until  forty-three  days  after  receiving  them,  and  until  the  time  al- 
lowed by  the  policy  for  furnishing  proofs  has  expired,  it  can  not 
thereafter  object  to  their  sufficiency.67  The  refusal  of  an  adjuster 
for  the  company  to  pay  the  amount  of  the  loss  on  the  ground  that 
the  insured  had  made  false  representations  in  the  application  for 

^Schmurr   v.    State    Ins.    Co.,    30  (1899);    American,  etc.,   Ins.  Co.  v. 

Ore.  29,  46  Pac.  363   (1896).  Henninger,  87  111.  App.  440   (1899). 

01  Morotock  Ins.  Co.  v.  Cheek,  93  w  Merchants'    Ins.    Co.   v.    Nowlin 

Va.  8,   57  Am.   St.  782    (1896);    Me-  (Tex.),  56  S.  W.  198    (1900). 

Bryde  v.   South  Carolina,  etc.,  Ins.  65  Betcher  v.   Capital  F.   Ins.   Co., 

Co.,   55    S.   C.   589,   74   Am.    St.    769  78  Minn.  240,  80  N.  W.  971   (1899). 

(1899).  ^Wholley  v.  Western  Assur.  Co., 

^McCarvel  v.  Phenix  Ins.  Co.,  64  174  Mass.  263,  54  N.  E.  548   (1899). 

Minn.  193,  66  N.  W.  367   (1896).  "  Fort  Wayne   Ins.   Co.  v.   Irwin, 

63Soorholtz  v.  Marshall,  etc.,  Ins.  23  Ind.  App.  53,  54  N.  E.  817  (1899). 
Co.,    109    Iowa    522,    80    N.    W.    542 
21 — ELLIOTT  INS. 


§    312  THE    STANDARD   POLICY.  322 

insurance,  and  that  he  was  guilty  of  burning  the  house,  is  not  a 
waiver  of  a  condition  requiring  proofs  of  loss.68  It  is  said  in  New 
York  that  an  insurance  agent  can  not  waive  the  terms  of  the  New 
York  standard  policy,  and  that  where  a  party  agrees  to  insure  another 
and  to  issue  a  New  York  standard  policy,  but  fails  to  do  so,  and  after 
loss  denies  that  any  contract  existed,  it  is  not  a  waiver  of  proofs  of 
loss.69  The  company  was  held  to  have  waived  proofs  of  loss  where 
the  local  agent  told  the  insured,  at  the  time  the  general  agent  ap- 
praised the  property  after  loss,  that  he  need  not  make  any  proofs 
of  loss,  and  that  if  he  was  not  satisfied  with  the  appraisement  the 
company  would  make  a  new  one.70  The  fact  that  the  policy  prohibits 
a  waiver  of  the  proofs  of  loss,  either  by  the  adjuster  or  the  president 
of  the  company,  does  not  prevent  their  acts  after  the  loss  from 
amounting  to  a  waiver.71  An  agent  with  full  power  to  adjust  and  pay 
claims  against  the  company  has  authority  to  waive  the  provisions  in 
the  policy  requiring  the  service  of  notice  and  proofs  of  loss,  and  the  ap- 
pointment of  appraisers.72  The  company  waives  proofs  of  loss  where 
the  adjuster,  after  having  a  personal  interview  with  the  insured,  who 
answers  questions  respecting  the  origin  of  the  fire,  refuses  to  pay  the 
amount  of  the  loss  to  an  assignee  of  the  policy  because  the  property 
was  mortgaged.73  Where  there  is  a  waiver  of  proofs  .of  loss  by  the 
company  it  inures  to  the  benefit  of  the  mortgagee  where  the  policy  is 
payable  to  him  as  his  interest  may  appear.74 

§  312.  To  whom  notice  must  be  given. — The  policy  provides  that 
notice  and  statement  of  loss  shall  be  given  to  the  company.  This  pro- 
vision is  complied  with  by  giving  notice  and  furnishing  a  statement 
to  a  duly  authorized  agent  of  the  company.75  It  is  held  in  Minnesota 
that  it  is  not  sufficient  to  give  notice  of  loss  to  a  local  agent;76  but 
where  the  notice  is  given  to  a  local  agent,  who  transmits  it  to  his 

68  Phoenix   Ins.   Co.  v.   Minner,   64  73  Western  Assur.  Co.  v.  McCarty, 

Ark.  590,  44  S.  W.  75  (1898).  18    Ind.    App.    449,    48    N.    E.    265 

89  Hicks  v.  British,  etc.,  Assur.  Co.,  (1897). 

162  N.  Y.  284,  56  N.  E.  743   (1900).  "State    Ins.    Co.    v.    Ketcham,    9 

TOMcCoubray  v.  St.  Paul,  etc.,  Ins.  Kan.  App.  552,  58  Pac.  229   (1899). 

Co.,  64  N.  Y.  Supp.  112,  50  App.  Div.  "  Burlington  Ins.  Co.  v.  Lowery, 

(N.  Y.)   416   (1900).  61  Ark.  108,  54  Am.  St.  196   (1895). 

"Lake  v.  Farmers'  Ins.  Co.,  110  76Ermentrout  v.  Girard,  etc.,  Ins. 

Iowa  473,  81  N.  W.  710  (1900).  Co.,   63   Minn.   305,   56  Am.   St.   481 

"Smaldone  v.  President,  etc.,  162  (1895). 
N.  Y.  580,  57  N.  E.  168   (1900). 


323  EXHIBITION    OF    PROPERTY EXAMINATION    OF    PARTY.      §    313 

principal,  it  is  a  substantial  compliance.  In  Iowa,  evidence  that 
notice  and  proofs  of  loss  were  sent  to  the  firm  through  which  the 
policy  was  procured,  although  not  agents  of  the  company,  and  that 
they  forwarded  the  papers  by  mail  to  the  company,  is  admissible  for 
the  purpose  of  showing  that  the  company  actually  received  the 
same.77  Where  the  risks  of  the  insuring  company  are  reinsured 
under  a  contract  whereby  the  reinsuring  company  assumes  the  man- 
agement and  control  of  the  business  of  the  original  insurer,  and 
agrees  to  assume,  adjust  and  promptly  pay  its  losses,  proofs  of  loss 
under  a  policy  issued  by  the  original  insurer  may  be  made  to  the  re- 
insuring company.78  Apparent  authority  on  the  part  of  the  local 
agent  to  receive  proofs  of  loss  is  implied  from  a  custom  among  in- 
surance corporations?  to  prepare  proofs  of  loss  and  to  send  them  to 
officers.  "This  policy/'  said  Mr.  Justice  Morton,79  "contained  no 
provision  as  to  the  manner  in  which  proofs  of  loss  should  be  delivered 
to  the  company.  If,  therefore,  the  local  agents  had  apparent  author- 
ity, by  custom  or  otherwise,  to  receive  proofs  of  loss,  we  think  that 
delivery  to  them  would  constitute  delivery  to  the  company,  even  if 
they  had  not  authority  from  the  nature  of  their  agency  to  receive  them, 
or  if,  also,  in  the  absence  of  custom,  a  delivery  to  them  under  the 
circumstances  would  not  have  been  a  reasonable,  mode  of  sending 
proofs  of  loss  to  the  company,  on  neither  of  which  do  we  pass  an 
opinion."  In  the  same  case  it  was  held  that  a  delivery  of  the  proofs 
to  a  local  agent  is  delivery  to  the  company  where  the  commission  of 
the  agent  gives  him  "full  power  to  receive  proposals  for  insurance 
against  loss  or  damage  by  fire,  to  receive  moneys,  countersign,  issue, 
renew  and  consent  to  the  transfer  of  policies  subject  to  the  rules  and 
regulations  of  the  company,  and  to  such  of  their  instructions  as  may 
from  time  to  time  be  given  by  officers  of  the  company."  In  Illinois 
a  delivery  of  proofs  of  loss  to  a  local  agent  of  the  insurer,  in  the 
absence  of  any  provision  in  the  policy  to  the  contrary,  is  a  delivery 
to  the  company  for  all  the  purposes  of  the  policy.80 

XVII.     Exhibition  of  Property  and  Records — Examination  of  Party. 

The  insured,  as  often  as  required,  shall  exhibit  to  any  person  desig- 
nated ~by  this  company  all  that  remains  of  any  property  herein  de- 

77  Pennypacker  v.  Capital  Ins.  Co.,  Co.,  164  Mass.  382,  49  Am.  St.  467 
80  Iowa  56,  8  L.  R.  A.  236    (1890).  (1895). 

78  Whitney  v.  American   Ins.   Co.,  80  Insurance   Co.   v.   Hope,   58   111. 
127  Cal.  464,  59  Pac.  897  (1900).  75,  11  Am.  Rep.  48   (1871). 

79  Harnden  v.  Milwaukee,  etc.,  Ins. 


§    313  THE   STANDARD    POLICY.  324 

scribed,  and  submit  to  examinations  under  oath  by  any  person  named 
by  this  company,  and  subscribe  the  same;  and,  as  often  as  required, 
shall  produce  for  examination  all  books  of  account,  bills,  invoices,  and 
other  vouchers,  or  certified  copies  thereof  if  originals  be  lost,  at 
such  reasonable  place  as  may  be  designated  by  this  company  or  its 
representative,  and  shall  permit  extracts  and  copies  thereof  to  be 
made.81 

§  313.  Examination  of  party. — After  a  loss  it  is  made  the  duty  of 
the  insured,  as  often  as  required,  to  exhibit  to  any  person  designated 
by  the  company  all  that  remains  of  the  insured  property  and  to  sub- 
mit to  examination  under  oath,  by  any  person  named  by  the  company. 
A  general  provision  requiring  the  insured  to  submit  to  examination 
is  valid,82  although  certain  requirements  in  connection  therewith, 
such  as  that  the  examination  shall  be  held  apart  from  all  persons 
except  the  magistrate,  have  been  questioned.83  In  one  case  the  ques- 
tion whether  the  insured  was,  under  the  circumstances,  required  to 
submit  to  an  examination  was  said  to  be  a  mixed  question  of  law 
and  fact,  which  would  not  be  reviewed  by  a  court  of  appeals.84 

This  provision  is  generally  treated  as  a  condition  precedent  to  a 
recovery.  In  some  cases  a  refusal  is  said  to  result  in  a  forfeiture;85 
while  others  hold  that  it  merely  prevents  a  recovery  upon  the  policy 
until  there  is  a  substantial  compliance.86 

The  demand  for  an  examination  of  the  insured  must  be  of  such 
a  character  as  to  show  that  the  company  intends  to  require  com- 

81  This  provision  is  found   in  the     v.  Simmons,  49  Neb.  811,  69  N.  W. 
standard  policies  of  New  York,  New     125    (1896). 

Jersey,   Connecticut,   Rhode   Island,  S3  McGraw  v.  Germania  F.  Ins.  Co., 

Michigan,    Louisiana,    Iowa,    South  54  Mich.  145,  19  N.  W.  927    (1884). 

Dakota,    North    Dakota,    Wisconsin  M  Porter  v.  Traders'  Ins.  Co.,  164 

and  North  Carolina.     The  following  N.  Y.  504,  52  L.  R.  A.  424    (1900), 

provision  is  found  in  the  standard  annotated. 

policies    of    Massachusetts,    Minne-  M  Fleisch  v.  Insurance  Co.,  58  Mo. 

sota    and     Maine:     "The    company  App.  596   (1894);   Gross  v.  St.  Paul, 

may  also  examine  the  books  of  ac-  etc.,    Ins.    Co.,    22   Fed.    74    (1884); 

count  and  vouchers  of  the  insured,  Fire  Ins.  Co.  v.  Felrath,  77  Ala.  194, 

and  make  extracts  from  the  same."  54  Am.  Rep.  58  (1894). 

New    Hampshire    adds    the    words,  80  Weide  v.   Germania   Ins.   Co.,   1 

"and  shall  have  access  to  the  prem-  Dill.    (C.  C.)   441    (1870);    Commer- 

ises  and  property  damaged."  cial  Bank  v.  Fire  Ins.  Co.,  84  Wis. 

82  Gross  v.  St.  Paul,  etc.,  Ins.  Co.,  12,  54  N.  W.  109   (1893). 
22  Fed.   74    (1884);    JEtna   Ins.   Co. 


325  EXHIBITION    OF   PROPERTY — EXAMINATION    OF    PARTY.      §    313 

pliance  with  the  provision;  and,  therefore,  a  mere  expression  of  a 
"desire"  that  the  insured  be  examined  is  not  sufficiently  explicit.87 
In  a  case  where  compliance  with  the  condition  was  held  to  be  a  con- 
dition precedent  to  the  right  of  recovery,  the  court  said:88  "Hav- 
ing used  due  diligence  to  notify  the  insured  that  they  required  the 
performance  of  this  stipulation,  they  certainly  ought  not  to  be  held 
to  have  waived  its  performance.  If  the  insured  has  intentionally 
absented  himself  so  that  he  can  not  be  notified  that  the  performance 
of  the  stipulation  is  required,  he  should  be  held  to  have  had  due 
notice.  And  if  for  any  cause,  whether  by  his  fault  or  otherwise,  he 
can  not  be  notified,  that  may  be  his  misfortune  or  the  misfortune  of 
those  claiming  under  or  through  him,  but  is  no  reason  for  treating  as 
inoperative  an  important  stipulation  which  the  defendants  saw  fit  to 
require,  and  the  assured  to  give,  as  a  condition  which  was  to  be 
complied  with  before  there  could  be  any  obligation  to  pay  the  loss." 

Where  the  policy  provides  that  the  time  and  place  of  the  examina- 
tion shall  be  designated  by  the  company,  a  statement  by  the  company 
to  the  insured  that  it  wanted  an  examination  at  a  time  and  place 
convenient  to  him  is  not  such  a  demand  as  to  put  him  in  default.89 

The  insured  need  not  submit  to  an  examination  by  an  adjuster  who 
has  not  to  his  knowledge  been  authorized  to  represent  the  company.90 
The  examination  must  be  held  at  the  place  where  the  loss  occurred, 
and  neither  party  can  require  that  it  shall  be  held  elsewhere.91  The 
insured  need  submit  to  but  one  complete  examination,92  and  can  be 


87  McGraw  v.  Germania  F.  Ins.  Co.,  Harris  v.  Phoenix  Ins.  Co.,  35  Conn. 
54  Mich.  145   (1884);   State  Ins.  Co.  310   (1868). 

v.  Maackens,  38  N.  J.  L.  564  (1876).         91  American,  etc.,  Ins.  Co.  v.  Simp- 

88  Harris   v.    Phoenix    Ins.    Co.,    35  son,  43  111.  App.  98   (1890);   Fleisch 
Conn.    310,   Woodruff   Ins.   Gas.   190  v.   Insurance  Co.,   58   Mo.   App.   596 
(1868);  Niagara  F.  Ins.  Co.  v.  Fore-  (1894).     Even  where  the  stipulation 
hand,  169  111.  626   (1897),  and  cases  is  that  the  examination  shall  be  at 
therein  cited.  "such  reasonable  place  as  shall  be 

89  yEtna  Ins.   Co.  v.   Simmons,   49  designated"  by  the  company,  the  ex- 
Neb.  811,  69  N.  W.  125   (1896).  amination  must  be  at  the  place  of 

80  Scottish,  etc.,  Ins.  Co.  v.  Keene,  the  loss  when  that  is  as  convenient 

85  Md.  263,  37  Atl.  33   (1897).     For  for     the     company     as     elsewhere: 

further  illustrations,  see  Aurora  F.  Murphy    v.    Northern    British,    etc., 

Ins.    Co.    v.    Johnson,    46    Ind.    315  Co.,  61  Mo.  App.  323    (1895). 
(1874);   Dougherty  v.  German,  etc.,        "2  Moore  v.  Protection  Ins.  Co.,  29 

Ins.   Co.,   67   Mo.  App.   526    (1896);  Me.  97,  48  Am.  Dec.  514   (1848). 


§    314  THE   STANDARD   POLICY.  326 

required  to  answer  only  material  questions.93     He  is  also  entitled 
to  have  an  attorney  present  at  the  examination.94 

Where  the  policy  provided  that  the  insured  should  submit  to  an 
examination  under  oath  by  the  agent  of  the  company,  and  that  fraud 
or  false  swearing  would  forfeit  the  policy,  it  was  held  that  the  policy 
was  void,  where,  although  the  insured  swore  truthfully  as  to  the  actual 
loss,  he  swore  falsely  as  to  the  persons  from  whom  he  had  purchased 
the  property,  or  as  to  the  value  of  goods  purchased  from  a  certain  firm, 
even  though  the  false  swearing  was  with  no  intent  to  deceive  the 
defendant,  but  was  for  the  purpose  of  deceiving  other  persons.*6 

§  314.  Failure  to  produce  books. — The  standard  form  contemplates 
the  possible  loss  of  books  or  other  papers,  and  provides  for  the  use 
of  copies.  In  a  recent  case  it  appeared  that  the  insured  agreed  to  keep 
a  set  of  books  showing  a  complete  record  of  the  business  transactions, 
including  all  purchases  and  sales  both  for  cash  and  credit,  together 
with  the  last  inventory  of  said  business,  and  in  case  of  loss  agreed 
and  covenanted  to  produce  said  books  and  inventory, — "and  in  the 
event  of  failure  to  produce  the  same  this  policy  shall  be  deemed  null 
and  void,  and  no  suit  or  action  at  law  shall  be  maintained  thereon 
for  any  loss."  It  was  held,  under  this  provision,  that  a  failure  to  pro- 
duce the  books  and  inventory  means  a  failure  to  produce  them  if 
they  are  in  existence  when  called  for,  or  if  they  have  been  lost  or 
destroyed  by  the  fault,  negligence  or  design  of  the  insured.96  "Un- 
der any  other  interpretation  of  the  policies,"  said  Mr.  Justice  Harlan, 
"the  insured  could  not  recover  if  the  books  and  inventory  had  been 
stolen,  or  had  been  destroyed  in  some  other  manner  than  by  fire, 
although  they  had  been  placed  'in  some  secure  place  not  exposed  to  a 
fire'  that  would  reach  the  store.  If  the  plaintiffs  had  the  right,  under 
the  terms  of  the  policy,  as  undoubtedly  they  had,  to  remove  their 

93  Titus  v.  Glens  Falls  Ins.  Co.,  81  *  Claflin  v.  Franklin  Ins.  Co.,  110 

N.  Y.  410    (1880);   Insurance  Co.  v.  U.  S.  81,  3  Sup.  Ct  507  (1883). 

Weides,  14  Wall.  (U.  S.)  375  (1871);  M  Liverpool,  etc.,  Ins.  Co.  v.  Kear- 

Porter  v.  Traders'  Ins.  Co.,  164  N.  Y.  ney,  180  U.  S.  132,  21  Sup.  Ct.  326 

504,  52  L.  R.  A.  424  (1900).  (1901),  s.  c.  94  Fed.  314,  36  C.  C.  A. 

"American,  etc.,  Ins.  Co.  v.  Simp-  265    (1899);    Sneed  v.  British,  etc., 

son,  43  111.  App.  98  (1891);  Thomas  Assur.  Co.,  73  Miss.  279,  18  So.  928 

v.  Burlington  Ins.  Co.,  47  Mo.  App.  (1895). 
169  (1891);  Grigsby  v.  German  Ins. 
Co.,  40  Mo.  App.  276   (1890). 


327  EXHIBITION    OF    PROPERTY — EXAMINATION    OF    PARTY.       §    315 

books  and  inventory  from  the  safe  to  some  secure  place  not  exposed 
to  a  fire  which  might  destroy  the  building  in  which  they  carried  on 
business,  surely  it  was  never  contemplated  that  they  should  lose  the 
benefit  of  the  policies  if,  in  so  removing  their  books  and  inventory, 
they  were  lost  or  destroyed,  they  using  such  care  on  the  occasion 
as  a  prudent  man  acting  in  good  faith  would  exercise.  A  literal 
interpretation  of  the  contracts  of  insurance  might  sustain  a  contrary 
view,  but  the  law  does  not  require  such  an  interpretation.  In  so  hold- 
ing the  court  does  not  make  for  the  parties  a  contract  which  they  did 
not  make  for  themselves.  It  only  interprets  the  contract  so  as  to  do 
no  violence  to  the  words  used  and  yet  to  meet  the  ends  of  justice." 

§  315.  The  iron  safe  clause. — The  New  York  form  of  standard 
policy  does  not  contain  a  provision  requiring  the  insured  to  keep 
his  books  of  account  in  a  fireproof  safe.  Many  policies,  however,  con- 
tain this  provision,  and  a  failure  to  comply  with  it  precludes  a  re- 
covery.97 It  must,  however,  be  given  a  reasonable  construction.  The 
supreme  court  of  the  United  States98  recently  considered  a  policy 
which  contained  the  following  provision:  "The  assured,  under  this 
policy,  hereby  covenants  and  agrees  to  keep  a  set  of  books  showing  a 
complete  record  of  all  business  transacted,  including  all  purchases 
and  sales  both  for  cash  and  credit,  together  with  the  last  inventory 
of  said  business,  and  further  covenants  and  agrees  to  keep  such 
books  securely  locked  in  a  fireproof  safe  at  night  and  sat  all  times  when 
the  store  mentioned  in  this  policy*  is  -not  actually  open  for  business, 
or  in  some  secure  place  not  exposed  to  a  fire  which  would  destroy  the 
house  where  such  business  is  carried  on."  While  the  building  was 
threatened  by  fire  one  of  the  insured  parties  entered  the  building  for 
the  purpose  of  removing  the  books  of  the  firm  to  a  safe  place.  He 
opened  the  iron  safe  in  the  store  in  which  they  had  been  deposited  for 
the  night  and  took  them  to  his  residence,  some  distance  away.  In 

97  Gibson  v.  Missouri,  etc.,  Ins.  Co.,  a  set  of  books  and  an  inventory  will 

82   Mo.   App.   515    (1900);    Western  not  work  a  forfeiture  of  the  policy, 

Assur.  Co.  v.  Redding,  68  Fed.  708  since   such   a   provision   is  without 

(1895);  Niagara  P.  Ins.  Co.  v.  Fore-  consideration,  does  not  decrease  the 

hand,    169    111.    626,    48    N.    E.    830  risk,  and,  at  the  most,  only  tends 

(1897).     In  Mechanics',  etc.,  Ins.  Co.  to  the  better  preservation  of  the  evi- 

v.  Floyd,  20  Ky.  L.  1538,  49  S.  W.  dence  to   show  the  amount  of  the 

543  (1899),  it  is  held  that  a  failure  loss  sustained  in  case  of  fire, 

to  comply  with  a  provision  in  a  pol-  l's  Liverpool,  etc.,  Ins.  Co.  v.  Kear- 

icy  in  regard  to  the  safe-keeping  of  ney,  180  U.  S.  132  (1901). 


§    315  THE    STANDARD   POLICY.  328 

the  hurry  and  confusion  incident  to  removing  the  books  the  inventory 
was  either  left  in  the  safe  and  destroyed,  or  was  otherwise  lost,  and 
could  not  be  produced  after  the  fire.  The  other  books  were  saved 
and  exhibited  to  the  insurer  as  required.  It  was  not  claimed  that  the 
loss  of  the  inventory  was  due  to  fraud  or  bad  faith,  and  the  court 
charged  the  jury  that  the  books  which  had  been  kept  and  which  were 
produced  on  the  trial  were  a  substantial  compliance  with  the  terms 
of  the  policy.  The  company  claimed  a  literal  compliance  with  the 
words  of  the  policy,  and  the  court  said:  "It  will  be  observed  that 
the  insured  had  the  right  to  keep  the  books  and  inventor)^  either  in  a 
fireproof  safe  or  in  some  secure  place  not  exposed  to  a  fire  that  would 
destroy  the  house  in  which  their  business  was  conducted.  But  was  it 
intended  by  the  parties  that  the  policy  should  become  void  unless  the 
fireproof  safe  was  one  that  was  absolutely  sufficient  against  every  fire 
that  might  occur?  We  think  not.  If  the  safe  was  one  such  as  was 
commonly  used,  and  such  as,  in  the  judgment  of  prudent  men  in  the 
locality  of  the  property  insured,  was  sufficient,  that  was  enough  within 
the  fair  meaning  of  the  words  of  the  policy.  It  can  not  be  supposed 
that  more  was  intended.  If  the  company  contemplated  the  use  of  a 
perfect  safe  in  all  respects  and  capable  of  withstanding  any  fire,  how- 
ever extensive  and  fierce,  it  should  have  used  words  expressing  that 
thought.  NOT  do  the  words  'in  some  secure  place  not  exposed  to  a  fire 
which  would  destroy  the  house  where  said  business  is  carried  on'  nec- 
essarily mean  that  the  place  must  be  absolutely  secure  against  every 
fire  that  would  destroy  such  house.  If,  in  selecting  a  place  in  which  to 
keep  their  books  and  last  inventory,  the  insured  acted  in  good  faith 
and  with  such  care  as  prudent  men  ought  to  exercise  under  like  cir- 
cumstances, it  could  not  be  reasonably  said  that  the  terms  of  the  policy 
relating  to  that  matter  were  violated." 

"A  'fireproof  safe,  in  view  of  the  situation  of  a  small  country  mer- 
chant, and  his  needs  for  and  employment  of  a  safe,  can  only  mean 
the  usual  fireproof  safe  used  by  the  country  generally, — a  safe  com- 
posed of  incombustible  materials  and  fitted  to  protect  to  the  usual 
extent  and  in  the  ordinary  way,  books  and  papers  deposited  therein, 
and  not  that  rare  and  costly  structure,  if,  indeed,  such  there  be,  which 
is  capable  of  withstanding  successfully  the  action  of  fire  altogether, 
and  of  preserving  its  contents  from  harm  absolutely."99 

Where  the  insured  kept  a  complete  set  of  books  and  inventories  at 

"Sneed  v.  British,  etc.,  Assur.  Co.,  73  Miss.  279   (1895). 


329  EXHIBITION    OF    PROPERTY — EXAMINATION    OF    PARTY.      §    315 

his  dwelling  house,  located  about  seventy  yards  from  the  insured 
storehouse,  all  of  which  were  produced  for  inspection,  except  a  small 
cashbook  which  was  accidentally  left  in  the  storehouse  on  the  night 
of  the  fire,  it  was  held  that  there  was  not  a  forfeiture  of  the  policy, 
although  it  provided  that  he  should  keep  his  books,  including  his  cash- 
book,  in  a  place  not  exposed  to  a  fire  which  would  destroy  the  build- 
ing.100 

A  policy  contained  a  provision  that  the  insured  "shall  take  an 
inventory  of  stock  hereby  insured  at  least  once  a  year  during  the 
life  of  this  policy,  and  shall  keep  books  of  account,  strictly  detailing 
purchases  and  sales  of  said  stock,  and  shall  keep  such  inventory 
securely  locked  in  an  iron  safe  during  the  hours  that  the  said 
store  is  closed  for  business.  Failure  to  observe  these  conditions  shall 
work  a  forfeiture  of  all  claims  under  this  policy."  Eeference  was 
also  made  to  the  application,  which  was  made  a  part  of  the  policy. 
It  was  held  that  these  provisions,  which  should  be  construed  together, 
required  the  insured  to  take  an  inventory  some  time  within  a  year 
after  the  policy  was  issued  and  thereafter  to  keep  books  as  provided. 
The  agreement  to  keep  books  was  a  promissory  warranty,  and  failure 
to  observe  it  rendered  the  policy  voidable;  and  if  the  company 
knew  that  the  condition  was  not  being  complied  with,  and  took  no 
steps  to  forfeit  the  policy,  it  could  not,  after  the  loss,  be  heard  to  say 
that  by  reason  of  the  failure  to  observe  the  condition  the  policy  was 
void.101 

Where  the  insured  agreed  to  keep  the  books  connected  with  his  sa- 
loon business  in  a  fireproof  safe  or  other  secure  place  "at  night,"  and 
at  all  times  when  the  place  was  not  actually  open  for  business,  he  can 
not  recover  on  the  policy  where  the  books  were  kept  under  the  counter 
instead  of  in  the  safe,  although  the  place  was  open  all  night.102 

The  provision  requiring  the  books  to  be  kept  in  a  fireproof  safe  is 
waived  by  the  statement  of  an  adjuster  that  the  insured  would  have 
to  get  duplicates  for  certain  invoices  in  order  to  make  the  required 
proofs  of  loss,  whereby  the  insured  was  induced,  at  considerable 
expense  and  trouble,  to  secure  such  duplicates.103 

100  Niagara   F.    Ins.    Co.   v.   Heflin  103  Corson  v.  Anchor,  etc.,  Ins.  Co. 
(Ky.),  60  S.  W.  393   (1901).  (Iowa),    85   N.   W.    806    (1901).     In 

101  Hanover  P.  Ins.  Co.  v.  Dole,  20  Northwestern,  etc.,  Ins.  Co.  v.  Mize 
Ind.  App.  333,  50  N.  E.  772   (1898).  (Tex.    Civ.    App.),    34    S.    W.    670 

102  Southern    Ins.    Co.    v.    Parker,  (1896),  it  was  held  that  the  knowl- 
61  Ark.  207,  32  S.  W.  507  (1895).  edge  of  an  agent  who  states  to  the 


§  316 


THE    STANDABD   POLICY. 


330 


XVIII.     Arbitration  of  the  Amount  of  Loss. 

In  the  event  of  disagreement  as  to  the  amount  of  loss  the  same 
shall,  as  above  provided,  be  ascertained  by  two  competent  and  disin- 
terested appraisers,  the  insured  and  this  company  each  selecting  one, 
and  the  two  so  chosen  shall  first  select  a  competent  and  disinterested 
umpire;  the  appraisers  together  shall  then  estimate  and  appraise  the 
loss,  stating  separately  sound  value  and  damage,  and,  failing  to  agree, 
shall  submit  their  differences  to  the  umpire;  and  the  award  in  writing 
of  any  two  shall  determine  the  amount  of  such  loss;  the  parties  thereto 
shall  pay  the  appraiser  respectively  selected  by  them  and  shall  bear 
equally  the  expenses  of  the  appraisal  and  umpire.10* 


insured  that  it  will  not  be  necessary 
for  him  to  have  an  iron  safe,  or  to 
keep  a  set  of  books,  although  the 
policy  contained  such  a  provision, 
is  not  binding  on  the  company 
where  the  policy  also  provides  that 
no  agent  shall  have  power  to  waive 
any  of  the  provisions  of  the  policy 
except  in  writing  attached  to  the 
policy.  In  German  Ins.  Co.  v.  Ams- 
baugh,  8  Kan.  App.  197,  55  Pac.  481 
(1898),  it  was  held  that  an  inven- 
tory of  goods  taken  six  and  one- 
half  years  before  the  fire,  shown  to 
be  a  correct  inventory  as  to  quanti- 
ties and  values,  is  competent  evi- 
dence in  connection  with  books  of 
account  duly  kept  and  proven  to 
show  purchases  and  sales  of  goods 
made  from  the  day  of  the  inventory 
to  the  fire.  It  further  appeared 
that  other  evidence  tending  to  show 
the  value  of  the  stock  had  been  de- 
stroyed by  the  fire. 

10*See  also,  XX.  Time  Within 
Which  Loss  is  Payable,  p.  357. 
This  provision  is  found  in  the 
standard  policies  of  New  York,  New 
Jersey,  Rhode  Island,  Connecticut, 
Louisiana,  South  Dakota,  North 
Dakota  and  North  Carolina.  The 
Michigan  provision  provides  that 
the  award  of  the  appraisers  shall 
be  "prima  facie  evidence  of  the 


amount  of  such  loss."  Iowa  adds, 
"and  unless  such  proofs,  declara- 
tions and  certificates  are  produced, 
and  examinations  had  and  apprais- 
als permitted,  and  an  award  made, 
when  this  company  has  elected  to 
appraise,  the  loss  shall  not  be  pay- 
able," it  being  also  provided  that 
an  appraisal  shall  be  had  "upon 
written  notice  to  the  insured  of  the 
company's  election  to  determine  the 
amount  of  the  loss  by  appraisal." 
The  Wisconsin  clause  is  as  follows: 
"In  the  event  of  disagreement  in 
the  amount  of  the  loss  the  same 
shall,  as  above  provided,  be  ascer- 
tained by  two  competent  and  dis- 
interested appraisers,  who  shall 
be  residents  of  this  state,  unless 
otherwise  agreed  by  the  parties 
hereto,  the  insured  and  this  com- 
pany each  selecting  one  within 
thirty-five  days  after  the  mailing  of 
proof  of  loss  to  the  company,  as 
herein  stated,  and  in  case  either 
party  fails  to  select  an  appraiser 
within  such  time  the  other  ap- 
praiser and  the  umpire  selected,  as 
hereinbefore  provided,  may  act  as 
a  board  of  appraisers,  and  whatever 
award  they  shall  find  shall  be  as 
binding  as  though  the  two  ap- 
praisers had  been  chosen,  and  the 
two  so  chosen  shall  first  select  a 


331 


ARBITRATION. 


316 


§  316.  Disagreement. — Before  this  provision  of  the  policy  can  be 
invoked  it  must  appear  that  there  is  a  real  disagreement  between  the 
insurer  and  the  insured.105  Hence,  a  mere  general  objection  to  a  state- 
ment of  the  loss  without  pointing  out  the  items  excepted  to  will  not 
constitute  a  failure  to  agree,  and  will  not  make  a  case  for  arbitra- 
tion.10,0 A  provision  making  an  award  a  condition  precedent  to  the 
commencement  of  an  action  upon  the  policy  presupposes  a  failure 
to  agree  and  consequent  arbitration.107  Where  the  company,  after 


competent  and  disinterested  um- 
pire, provided  that  if  after  five  days 
the  two  appraisers  can  not  agree 
on  such  umpire,  the  presiding  judge 
of  the  circuit  court  wherein  the  loss 
occurs  may  appoint  such  an  umpire 
upon  application  of  either  party  in 
writing  by  giving  five  days'  notice 
thereof  in  writing  to  the  other 
party.  Unless  within  thirty  days 
after  proof  of  the  loss  has  been 
mailed  to  the  company,  either  party, 
the  assured  or  the  company,  shall 
have  notified  the  other  in  writing 
that  such  party  demands  an  ap- 
praisal, such  right  of  appraisal  shall 
be  waived."  The  remainder  of  the 
clause  follows  the  New  York  form. 
The  Massachusetts  and  Maine  poli- 
cies provide  that:  "In  case  of  loss 
under  this  policy,  and  a  failure  of 
the  parties  to  agree  as  to  the 
amount  of  the  loss,  it  is  mutually 
agreed  that  the  amount  of  such  loss 
shall  be  referred  to  three  disinter- 
ested men,  the  company  and  the  as- 
sured each  choosing  one  out  of  three 
persons,  to  be  named  by  the  other, 
and  the  third  being  selected  by  the 
two  so  chosen;  the  award  in  writ- 
ing by  a  majority  of  the  referees 
shall  be  conclusive  and  final  upon 
the  parties  as  to  the  amount  of  the 
loss  or  damage,  and  such  reference, 
unless  waived  by  the  parties,  shall 
be  a  condition  precedent  to  any 
right  of  action  in  law  or  equity  to 


recover  for  such  loss;  but  no  per- 
son shall  be  chosen  or  act  as  referee 
against  the  objection  of  the  other 
party,  who  has  acted  in  like  capac- 
ity within  four  months."  The 
provision  in  the  Minnesota  standard 
policy  is  similar  to  the  above,  but 
does  not  permit  an  appraisement  in 
cases  of  total  loss  on  buildings.  The 
New  Hampshire  policy  provides 
that:  "In  case  difference  of  opin- 
ion shall  arise  as  to  the  amount  of 
any  loss  under  this  policy  other  than 
on  buildings  totally  destroyed,  un- 
less the  company  and  the  assured 
shall,  within  fifteen  days  after  no- 
tice of  loss,  mutually  agree  upon 
referees  to  adjust  the  same,  either 
party  may,  upon  giving  written  no- 
tice to  the  other,  apply  to  a  justice 
of  the  supreme  court,  who  shall  ap- 
point three  referees,  one  of  whom 
shall  be  thoroughly  acquainted  with 
the  kind  of  property  to  be  con- 
sidered, and  their  award  in  writing, 
after  proper  notice  and  hearing, 
shall  be  final  and  binding  on  the 
parties.  The  referees'  fees  shall  be 
equally  divided  between  the  com- 
pany and  the  insured." 

105  American  F.  Ins.  Co.  v.  Stuart 
(Tex.),  38  S.  W.  395    (1896). 

106  Hickerson  v.  German,  etc.,  Ins. 
Co.,  96  Tenn.  193,  32  L.  R.  A.  172 
(1896). 

107  Vangindertaelen  v.  Phenix  Ins. 
Co.,   82   Wis.   112    (1892);    Boyle   v. 


§    317  THE    STANDARD   POLICY.  332 

receiving  proofs  of  loss,  disputes  the  amount  and  demands  an  arbitra- 
tion, there  is  a  disagreement  within  the  meaning  of  the  provision.108 
A  disagreement  merely  as  to  the  basis  of  estimating  the  loss  does  not 
bring  the  arbitration  provision  into  effect.109 

§  317.  Validity  of  provision. — This  form  of  policy  provides  for  the 
determination  of  the  amount  of  the  loss  by  arbitrators.  As  thus  re- 
stricted it  is  almost  universally  held  valid  and  binding  upon  the  par- 
ties.110 Nebraska  seems  to  be  the  only  state  in  which  a  provision 
for  arbitration  of  this  character  is  not  sustained.111 

The  effect  of  an  arbitration  under  this  provision  does  not  determine 
the  liability  of  the  company.112  It  is  equally  well  settled  that  the 
parties  can  not,  by  contract,  oust  the  jurisdiction  of  the  courts;  and 
a  provision  which  requires  the  submission  of  any  and  all  differences 
between  the  parties  to  arbitration  is  invalid  and  unenforceable.113 

A  provision  for  arbitration  as  thus  limited  furnishes  a  speedy, 
convenient  and  inexpensive  mode  of  ascertaining  the  loss  or  damage 
of  the  insured  if  he  is  entitled  to  recover;  and  it  is  not  open  to  the 
objection  that  it  tends  to  oust  the  courts  of  their  rightful  jurisdiction. 
Under  it  the  right  of  recovery  is  left  open,  and  the  appraisal  serves 
only  to  liquidate  and  determine  the  amount  of  the  loss  or  damage. 

Provisions  for  arbitration  should  not  be  subjected  to  a  narrow  or 
technical  construction,  but  should  be  construed  liberally  in  favor  of 

Hamburg,  etc.,  Ins.  Co.,  169  Pa.  St.  etc.,  Ins.  Co.,  138  Mass.  572  (1885); 

349  (1895);  Farnum  v.  Phoenix  Ins.  Straker  v.  Phenix  Ins.  Co.,  101  Wis. 

Co.,  83  Cal.  246  (1890);  Chapman  v.  413,  77  N.  W.  752   (1898);   Hobkirk 

Rockford   Ins.  Co.,  89  Wis.   572,   28  v.  Phoenix  Ins.  Co.,  102  Wis.  13,  78 

L.  R.  A.  405   (1895).  N.  W.  160   (1899). 

108  Phoenix    Ins.    Co.    v.    Carnahan,         m  National,    etc.,    Ace.    Ass'n    v. 
63  Ohio  St.  258,  58  N.  E.  805  (1900).  Burr,  44  Neb.  256  (1895). 

See  JEtna  F.  Ins.  Co.  v.  Davis  (Ky.),  m  Smith  v.  Herd   (Ky.),  60  S.  W. 

55  S.  W.  705    (1900).  841,  1121  (1901). 

109  Virginia,  etc.,  Ins.  Co.  v.  Can-  113  Supreme  Council  v.   Forsinger, 
non,  18  Tex.  Civ.  App.  588,  45  S.  W.  125  Ind.  52,  9  L.  R.  A.  501   (1890); 
945   (1898).  Fox    v.    Masons',    etc.,    Ace.    Ass'n, 

110  Scott   v.    Avery,    5    H.    L.    Gas.  96    Wis.    390,    Woodruff    Ins.    Cas. 
811    (1856);    Fischer  v.   Merchants'  197    (1897);   Raymond  v.  Farmers', 
Ins.  Co.    (Me.),  50  Atl.  282   (1901);  etc.,  Ins.  Co.,  114  Mich.  386  (1897); 
Phoenix    Ins.    Co.    v.    Carnahan,    63  Scott  v.   Avery,   5    H.   L.   Cas.   811 
Ohio  St.  258,  58  N.  E.  805    (1900);  (1856);    Chapman  v.  Rockford  Ins. 
Hamilton  v.  Home  Ins.  Co.,  137  U.  Co.,    89    Wis.    572,    62    N.    W.    422 
S.  370  (1890);  Reed  v.  Washington,  (1895). 


333  ARBITRATION.  §    317 

the  insured.  "It  should  be  noted  that  the  condition  alleged  to  be 
violated  in  this  case  applies  only  after  the  capital  fact  of  a  loss.  The 
object  of  the  provision  was  to  prescribe  the  manner  in  which  an  ac- 
crued loss  was  to  be  adjusted  and  ascertained.  The  liability  of  the  de- 
fendant having  become  fixed  by  the  happening  of  the  event  upon 
which  the  contract  was  to  mature,  conditions  which  prescribe  meth- 
ods and  formalities  for  ascertaining  the  extent  of  it  or  for  adjust- 
ing it,  are  not  to  be  subjected  to  any  narrow  or  technical  construc- 
tion, but  construed  liberally  in  favor  of  the  insured."114 

The  rules  governing  arbitration  apply  to  mutual  as  well  as  other 
insurance  companies.1148- 

A  by-law  of  a  mutual  insurance  association  which  requires  the 
presentation  of  claims  to  certain  officers  of  the  company,  and,  if  their 
decision  is  adverse  to  the  claimant,  that  an  appeal  must  be  taken  to  the 
governing  body,  whose  decision  shall  be  final,  is  valid  in  so  far  as  the 
provision  for  appeal  is  concerned,  and  void  so  far  as  it  attempts  to  oust 
the  jurisdiction  of  the  courts.  The  claimant,  after  having  taken  the 
required  appeal  to  the  governing  body,  may  maintain  an  action  in  the 
courts  to  enforce  his  claim.115  Where  the  constitution  of  a  mutual 
benefit  association  provided  that  "all  questions,  whether  of  law  or  of 
fact,  appertain  to  the  sole  jurisdiction  of  this  lodge  and  the  authorities 
of  this  order,  and  their  decision  in  the  premises  shall  be  binding," 
the  supreme  court  of  California  said:116  "The  society  has  many  of 
the  features  of  an  organized  charity,  and  it  has  been  said  that  the 
claim  for  a  sick  benefit  is  not  a  property  right.  In  short,  the  rules 
of  law  have  not  been  applied  to  these  institutions  with  the  same  strict- 
ness with  which  they  have  been  applied  to  corporations  organized 
for  profit.117  In  an  ordinary  case  I  should  be  loath  to  hold  that  a 
man  can  effectually  waive  his  right  to  sue  in  a  court  of  law  before 
his  right  of  action  has  arisen,  or  that  he  can  in  advance  agree  to  an 

114  Porter  v.  Traders'  Ins.  Co.,  164  115  Supreme  Council  v.  Forsinger, 

N.  Y.  504,  52  L.  R.  A.  424    (1900).  125  Ind.  52,  9  L.  R.  A.  501    (1890). 

See  Montgomery  v.  American,  etc.,  118  Robinson  v.  Templar  Lodge,  117 

Ins.  Co.,  108  Wis.  146,  84  N.  W.  175  Cal.  370,  49  Pac.  170   (1897). 

(1900),  and  Moyer  v.  Sun  ins.  Office,  m  Rood  v.  Railway,  etc.,  Ass'n,  31 

176    Pa.    St.    579    (1896)     [different  Fed.    62     (1887);     Van    Poucke    v. 

provisions    relating    to    arbitration  Netherland,  etc.,  Soc.,  63  Mich.  378 

and  appraisal  construed].  (1886);  Canfield  v.  Great  Camp,  etc., 

114aFox     v.     Masons',     etc.,     Ace.  87  Mich.  626,  24  Am.  St.  186  (1891). 
Ass'n,   96  Wis.   390,    71   N.   W.   363, 
Woodruff  Ins.  Gas.  197  (1897). 


§    318  THE    STANDARD   POLICY.  334 

arbitration,  but  it  has  been  so  held  with  reference  to  these  mutual 
benefit  societies,  and,  with  reference  to  them,  I  think  the  regulation 
reasonable.  But,  even  if  this  view  were  not  correct,  there  can  be  no 
doubt  of  the  proposition  that  he  must  first  exhaust  all  the  remedies 
afforded  within  the  order  before  he  can  maintain  an  action  at  law. 
No  such  fact  is  averred  in  the  complaint,  and,  as  I  understand  the 
record,  although  previous  application  had  been  made  for  the  benefits 
which  had  accrued  before  the  time  during  which  the  benefits  here 
sued  for  accrued,  there  is  no  evidence  which  tended  to  show  that  any 
application  at  all  had  been  made  to  the  lodge  for  the  amounts  here 
sued  for.  The  authorities  all  seem  to  hold  that  this  resource  must 
be  first  exhausted."118 

§  318.  Where  there  is  a  total  loss. — All  provisions  in  a  policy  in 
conflict  with  a  valued  policy  statute  are  void,  and  hence  a  provision 
for  the  appointment  of  arbitrators  in  case  of  loss  is  ineffective  where 
the  property  is  wholly  destroyed.  In  such  case  there  can  be  nothing 
which  can  properly  be  submitted  to  arbitration.119  Where  the  total 
insurance,  exclusive  of  the  foundation  of  the  building,  is  less  than  its 
insurable  value  as  designated  by  the  insurer  in  the  policy,  it  is  not, 
under  the  provision  of  the  Minnesota  valued  policy  law,  necessary 
for  the  insured  to  submit  to  arbitration,  although  the  foundation  is 
included  in  the  description  of  the  property.120 

By  consenting  to  arbitrate  the  amount  of  the  loss  in  pursuance 
of  a  provision  in  a  policy,  the  insured  is  not  precluded  in  a  subse- 
quent suit  on  the  policy  from  claiming  to  recover  for  a  total  loss  if  the 
evidence  sustains  the  claim.  In  a  recent  case  in  Ohio  it  appeared  that 
the  question  of  loss  was  submitted  to  arbitrators,  and  the  insured  being 
dissatisfied  with  the  award,  and  claiming  that  there  was  a  total  loss, 
refused  to  accept  the  amount  awarded  and  brought  suit  upon  the 
policy.  The  company  denied  that  there  was  a  total  loss,  and  insisted 
upon  the  provisions  of  the  arbitration.  The  court  said:121  "The 

118  Levy  ,v.    Magnolia    Lodge,    110  Seyk  v.   Millers',   etc.,   Ins.   Co.,   74 
Cal.  297   (1895);   Robinson  v.  Irish,  Wis.    67,    3    L.    R.    A.    523    (1889); 
etc.,  Soc.,  67  Cal.  135   (1885).  Merchants'  Ins.  Co.  v.  Stephens,  22 

119  German    Ins.    Co.   v.    Eddy,    37  Ky.  L.  999,  59  S.  W.  511  (1900). 
Neb.   461,   19   L.  .R.   A.   707    (1893).  "°Ohage    v.    Union    Ins.    Co.,    82 
The    submission    to    arbitration    of  Minn.  426,  85  N.  W.  212  (1901). 
the   amount   of   the   loss   is   not   a  m  Pennsylvania    F.     Ins.    Co.    v. 
waiver  of  the  benefits  of  the  statute  Drackett,  63  Ohio  St.  41,  57  N.  E. 
making  the  amounts  stated  in  the  962  (1900). 

policy    the    measure    of    damages: 


335  ARBITRATION.  §    319 

section  referred  to  requires  a  company  insuring  any  building  or  struc- 
ture against  fire  to  cause  such  structure  or  building  to  be  examined  by 
an  agent,  who  is  required  to  make  a  full  description  of  the  building  or 
structure  and  fix  its  insurable  value,  and  then  provides  that  in  the  ab- 
sence of  any  change  increasing  the  risk  without  its  consent,  or  any 
intentional  fraud  on  the  part  of  the  insured,  in  case  of  total  loss,  the 
whole  amount  stated  in  the  policy  on  which  it  receives  premiums 
shall  be  paid  by  the  company,  and  in  case  of  a  partial  loss,  the  full 
amount  of  such  loss  shall  be  paid.  Statutes  similar  in  their  pro- 
visions are  common  to  many  of  the  states  of  the  Union,  and  it  is  gen- 
erally agreed  that  they  rest  on  grounds  of  public  policy — the  pre- 
vention of  the  mischief  incident  to  overinsurance, — and  that  the 
insured  can  not  be  held  to  a  waiver  of  them.124  It  does  not  neces- 
sarily follow  from  this  that  where  there  is  a  partial  loss  it  may  not 
be  ascertained  by  arbitrators;  and  where  there  is  a  clause  in  a  policy 
requiring  arbitration  the  parties  may  be  required  to  conform  to  it. 
But,  where  the  insured  insists  that  the  loss  is  total,  the  agreement  to 
arbitrate,  or  an  arbitration  had  fixing  the  amount,  will  not  preclude 
him  from  bringing  a  suit  as  for  a  total  one;  and  in  such  cases,  if  he 
establishes  that  there  was  a  total  one,  he  is  entitled  to  recover  the  full 
amount  of  the  policy,  notwithstanding  the  award  of  the  arbitrators 
was  to  the  contrary,  and  fixed  a  less  amount  as  the  measure  of  the 
loss.  But,  on  the  other  hand,  should  he  fail  in  establishing  a  total 
loss,  the  amount  of  the  recovery  will  be  limited  to  the  amount  of 
the  award  where  there  was  no  fraud  in  obtaining  it." 

§  319.  Demand  for  arbitration. — Where  arbitration  is  provided  for 
on  the  request  of  one  of  the  parties,  it  becomes  imperative  only  after 
such  request  is  made.125  If  neither  party  avails  himself  of  the  right 
to  arbitrate,  it  is  waived,  and  an  action  may  be  maintained  upon  the 

m  Insurance  Co.  v.  Leslie,  47  Ohio  125  In   Davis  v.   Anchor,   etc.,   Ins. 

St.  409,  24  N.  B.  1072.  (1890);   Seyk  Co.,  96  Iowa  70,  64  N.  W.  687  (1895), 

v.  Millers',  etc.,  Ins.  Co.,  74  Wis.  67,  the  policy  provided  for  arbitration 

41  N.  W.  443  (1889);  St.  Clara,  etc.,  at   the    "written    request   of   either 

Academy  v.   Delaware   Ins.   Co.,   98  party,"   and  that  no  action   should 

Wis.    257,    73    N.    W.    767     (1898);  be   brought  until  after  the  award. 

Havens  v.  Germania  F.  Ins.  Co.,  123  Ii  was  held  that  arbitration  was  not 

Mo.  403,  27  S.  W.  718,  26  L.  R.  A.  a  condition  precedent  to  an  action 

107    (1894);    White  v.   Connecticut,  in  the   absence  of   a   request.     But 

etc.,    Ins.   Co.,   4   Dill.    (C.   C.)    177  see  Probst  v.  Insurance  Co.,  64  Mo. 

(1877);  German  F.  Ins.  Co.  v.  Eddy,  App.  484   (1896);   Murphy  v.  North 

36  Neb.  461,  54  N.  W.  856,  19  L.  R.  A.  British,  etc.,  Ins.  Co.,  61  Mo.  App. 

707   (1893);  Reilly  v.  Franklin  Ins.  323  (1895). 
Co.,  43  Wis.  449   (1877). 


§    319  THE    STANDARD   POLICY.  336 

policy.126  Policies  contain  different  provisions  in  this  respect.  Un- 
der the  New  York  form  either  party  has  the  right  to  require  an  ap- 
praisal when  there  is  a  disagreement  as  to  the  amount  of  the  loss.  It 
is  not  the  duty  of  the  insured  to  initiate  an  appraisal,  as  an  appraisal 
is  a  condition  precedent  to  recovery  only  when  one  "has  been  re- 
quired" hy  the  insurer.1268-  In  Kentucky  it  was  said  that  the  in- 
sured need  not  plead  or  prove  performance  of  the  provision  for 
arbitration,  as  it  is  the  duty  of  the  company  to  propose  arbitra- 
tion in  case  of  disagreement.127  In  Iowa,  provisions  in  a  policy 
that  an  appraisal  by  arbitrators  shall  be  made  if  there  be  a  disagree- 
ment as  to  the  loss,  and  "that  the  loss  shall  not  be  payable  until  sixty 
days  after  notice  and  satisfactory  proofs  of  loss  have  been  given, 
including  an  award  by  appraisers  when  an  appraisal  has  been  re- 
quired, and  that  no  action  on  the  policy  can  be  maintained  without 
full  compliance  by  the  assured  with  all  the  foregoing  requirements," 
does  not  make  an  appraisal  a  condition  precedent  to  the  right  to  sue 
where  the  company  makes  no  demand  therefor.128  In  a  Massachu- 
setts case  it  appeared  that  the  policy  provided  for  a  submission  to  ar- 
bitrators, in  case  of  a  loss,  "at  the  written  request  of  either  party," 
and  that  no  suit  or  action  could  be  maintained  until  after  such 
award.  It  was  held  that  no  right  of  action  existed  prior  to  an  arbi- 
tration or  its  waiver,  and  that  the  policy  could  not  be  construed  as 
making  a  written  request  for  arbitration  necessary,  in  case  of  a  dif- 
ference as  to  the  amount  of  the  loss,  in  order  to  prevent  the  immediate 
institution  of  an  action.  The  court  recognized  the  right  of  either 
party  to  an  arbitration,  but,  on  the  facts  and  the  language  of  the  pol- 
icy, held  that  an  arbitration,  not  having  been  demanded,  must  be  held 
to  have  been  waived,129 


v.  Fireman's  Fund  Ins.  Germania  F.  Ins.  Co.  v.  Stewart,  13 

Co.,    63    Mich.    633,    6   Am.    St.    338  Ind.  App.  627,  42  N.  B.  286  (1895); 

(1886);    Garrettson    v.    Merchants',  National  Home,  etc.,  Ass'n  v.  Dwell- 

etc.,   Ins.   Co.    (Iowa),   86   N.  W.  32  ing  House   Ins.  Co.,  106  Mich.  236, 

(1901).  64  N.  W.  21   (1895);   Davis  v.  Atlas 

128a  Chainless  Cycle  Mfg.  Co.  v.  Se-  Assur.   Co.,   16   Wash.   232,   47    Pac. 

curity  Ins.  Co.  (N.  Y.),  62  N.  E.  392  436,  885    (1896);    Sun,  etc.,  Ins.  Co. 

(1901)  ;  Silver  v.  Assurance  Co.,  164  v.  Crist,  19  Ky.  L.  305,  39  S.  W.  837 

N.  Y.  381,  58  N.  E.  284  (1900).  (1897);    Stephens   v.    Union    Assur. 

127  Sun,  etc.,  Ins.  Co.  v.   Crist,   19  Soc.,    16    Utah    22,    67   Am.    St.    595 
Ky.  L.  305,  39  S.  W.  837   (1897).  (1897). 

128  Lesure   Lumber   Co.   v.   Mutual  "       m  Hutchinson    v.    Liverpool,    etc., 
F.  Ins.  Co.,  101  Iowa  514,  70  N.  W.  Ins.  Co.,  153  Mass.  143,  10  L.  R.  A. 
761  (1897).     To  the  same  effect,  see  558   (1891),  annotated. 


337  ARBITRATION.  §    319 

In  a  well  considered  case  in  the  circuit  court  of  appeals130  the  insur- 
ance company  contended  that  it  was  the  duty  of  the  insured  to  take 
the  initiative  and  demand  an  arbitration ;  but  the  court  said :  "Each 
party  is  entitled  to  demand  a  reference,,  but  neither  can  compel  it,  and 
neither  has  the  right  to  insist  that  the  other  shall  first  demand  it,  and 
shall  forfeit  any  right  by  not  doing  so.  If  the  company  demands 
it,  and  the  insured  refuses  to  arbitrate,  his  right  of  action  is  suspended 
until  he  consents  to  an  arbitration;  and  if  the  insured  demands  an 
arbitration,  and  the  company  refuses  to  accede  to  the  demand,  the 
insured  may  maintain  a  suit  on  the  policy  notwithstanding  the 
language  of  the  twelfth  section  of  the  policy;  where  neither  party 
demands  an  arbitration,  both  parties  thereby  waive  it.  The  clause 
is  to  be  construed  the  same  as  if  it  read,  'upon  the  request  of  either 
party.'  These  words,  or  their  equivalent,  are  commonly  found  in 
similar  clauses  in  policies  of  fire  insurance,  and  they  are  necessarily 
and  plainly  implied  in  this  policy.  This  is  the  interpretation  placed 
upon  the  policy  of  a  defendant  in  error,  identical  with  the  one 
here  in  suit,  by  the  supreme  court  of  Montana.  That  court,  constru- 
ing a  clause  in  a  policy  declaring  that  no  suit  thereon  should  be 
sustainable  until  after  an  award,  says  this  provision  'will  come  into 
action  to  bar  the  plaintiff's  recovery  where  he  has  refused  to  arbitrate 
after  a  matter  for  arbitration  arose,  and  the  same  was  seasonably 
sought  in  conformity  with  the  terms  of  the  policy.' ': 

Where  the  policy  provided  that,  in  the  event  of  a  disagreement  as 
to  the  amount  of  damages,  the  matter  should,  "at  the  written  request 
of  either  party,  be  submitted  to  the  judgment  of  two  competent  per- 
sons, to  be  mutually  appointed  by  the  assured  and  the  company,"  and 
further,  that  no  suit  should  be  sustainable  in  a  court  of  law  or  chan- 
cery until  after  an  award  should  have  been  obtained  in  the  manner 
provided,  the  court  said :  "Arbitration  becomes  imperative  only  after 
a  written  request  for  one  has  been  made.  The  request,  as  it  stands 
in  this  policy,  is  optional  with  either  party,  and,  neither  of  them 
having  availed  themselves  of  the  right  to  arbitrate,  it  must  be  deemed 
waived  by  both,  and  in  such  case  the  plaintiff  was  left  to  the  mode 
of  redress  provided  by  law."131  So,  where  the  policy  provided  for 

130  Kahnweiler  v.  Phenix  Ins.  Co.,        m  Nurney  v.  Fireman's  Fund  Ins. 
67  Fed.  483,  14  C.  C.  A.- 485  (1895);      Co.,    63    Mich.    633,    30    N.    W.    350 
approved  in  Western  Assur.  Co.  v.      (1886). 
Decker,  98  Fed.  381,  39  C.  C.  A.  383 
(1899). 

22 — ELLIOTT  INS. 


§    320  THE    STANDARD   POLICY.  338 

arbitration  "at  the  written  request  of  either  party,"  the  court  said:132 
"It  is  either  optional  and  voluntary,  or  the  duty  rests  upon  each  alike 
to  make  such  written  request,  and  in  this  case  both  parties  have 
neglected  such  duty  alike,  and  neither  party  can  complain  of  the 
neglect  of  the  other." 

So,  in  Pennsylvania,  it  was  said:183  "It  was  the  right  of  either 
party  to  demand  an  arbitration,  and  it  was  the  right  of  either  party 
to  waive  it;  and  the  defendant,  having  made  no  such  demand,  must 
be  presumed  to  have  waived  it."  The  party  entitled  to  arbitration 
must  make  his  demand  within  a  reasonable  time. 

Where  no  demand  was  made  within  five  months  after  loss,  the  right 
was  held  to  have  been  waived.134  In  Ohio,  it  was  said  :135  "It  will 
be  observed  that  this  policy  imposes  no  obligation  on  the  insured  to 
furnish  an  award  of  appraisers  except  'when  appraisal  has  been  re- 
quired/ That  requirement  certainly  should  be  made  within  a  rea- 
sonable time  after  proof  of  loss,  and,  if  not  so  made  before  suit,  is 
no  obstacle  to  the  maintenance  of  the  action.  In  other  words,  a  de- 
mand by  the  insurer  for  an  appraisal  within  a  reasonable  time  after 
proof  of  the  loss  has  been  furnished  is,  under  such  a  policy,  a  condi- 
tion precedent  to  the  right  to  require  the  insured  to  furnish  an  award 
of  appraisers."  Where  either  party  is  entitled  to  arbitration  upon  de- 
mand, the  presentation  of  a  builder's  affidavit  as  to  the  amount  of 
the  loss,  and  a  waiver  by  the  company  of  formal  proofs,  does  not 
constitute  such  a  demand.136 

§  320.  Condition  precedent. — The  parties  may  agree  that  no  right 
of  action  shall  arise  against  the  insurer  until  the  amount  of  the  loss 
has  been  determined  by  arbitrators.  Hence,  where  the  policy  con- 
tains a  provision  to  the  effect  that  "such  reference,  unless  waived  by 
the  parties,  shall  be  a  condition  precedent  to  any  right  of  action  in 

m  Phoenix  Ins.  Co.  v.  Badger,   53  Stewart,  13  Ind.  App.  627,  42  N.  E. 

Wis.  283,  10  N.  W.  504  (1881).  286    (1895);    National    Home,    etc., 

183  Wright    v.    Susquehanna,    etc.,  Ass'n  v.   Dwelling  House   Ins.   Co., 
Ins.  Co.,  110  Pa.  St.  29,  20  Atl.  716  106  Mich.  236,  64  N.  W.  21   (1895); 
(1885).  Davis  v.  Atlas  Assur.  Co.,  16  Wash. 

184  Gere  v.  Council  Bluffs  Ins.  Co.,  232,  47  Pac.  436    (1897);    Sun,  etc., 
67  Iowa  272  (1885).  Ins.  Co.  v.  Crist,  19  Ky.  L.  305,  39 

*"  Grand    Rapids    F.    Ins.    Co.    v.  S.  W.  837  (1899). 
Finn,  60  Ohio  St.  513,  54  N.  E.  545         13a  Hutchinson    v.    Liverpool,    etc., 

(1899);    Lesure  Lumber  Co.  v.  Mu-  Ins.  Co.,  153  Mass.  143,  10  L.  R.  A. 

tual    F.     Ins.    Co.,    101     Iowa    514  558   (1890). 

(1897);    Germania    F.    Ins.    Co.    v. 


339 


ARBITRATION. 


320 


law  or  in  equity  to  recover  for  such  loss/'  no  right  of  action  exists 
until  the  condition  has  been  complied  with.137 

But  a  provision  for  arbitration  is  not  a  condition  precedent  to  the 
right  to  maintain  an  action  on  a  policy  to  recover  for  loss  thereunder, 
unless  clearly  made  so  by  the  terms  of  the  policy.138  If  this  intention 
does  not  appear  the  provision  is  simply  a  collateral  agreement,  and 
compliance  therewith  is  not  necessary  before  the  bringing  of  an 
action.  Arbitration  under  such  circumstances  is  optional  with  the 
parties,  and  either  may  decline  to  arbitrate.139  In  a  recent  case  in 
Iowa,  Mr.  Justice  Ladd  said:140  "There  is  nothing  in  the  policy 
making  submission  to  arbitration  a  condition  precedent  to  the  pay- 
ment of  the  loss  or  to  the  maintenance  of  an  action,  nor  can  such  a 
condition  be  inferred  from  its  terms.  The  authorities  recognize  the 
rule,  as  stated  by  Sir  George  Jessel,  M.  E.,  '(1)  where  the  action  can 


137  Hamilton     v.     Liverpool,     etc., 
Ins.  Co.,  136  U.  S.  242  (1890);   Gas- 
ser  v.  Sun  Fire  Office,  42  Minn,  315 
(1890);    Levine   v.   Lancashire   Ins. 
Co.,    66    Minn.    138,    68    N.    W.    855 
(1896);    Mosness    v.    German,    etc., 
Ins.     Co.,     50     Minn.     341     (1892); 
Fischer  v.  Merchants'  Ins.  Co.  (Me.), 
50  Atl.  282  (1901). 

138  Hamilton  v.  Home  Ins.  Co.,  137 
U.   S.   370,   Woodruff   Ins.   Cas.   194 
(1890). 

138  Grand  Rapids  F.  Ins.  Co.  v. 
Finn,  60  Ohio  St.  513,  71  Am.  St. 
736  (1899);  Birmingham  F.  Ins.  Co. 
v.  Pulver,  126  111.  329,  9  Am.  St. 
598  (1888);  Sergent  v.  Liverpool, 
etc.,  Ins.  Co.,  155  N.  Y.  349  (1898); 
McNally  v.  Phoenix  Ins.  Co.,  137  N. 
Y.  389  (1893);  Davis  v.  Atlas  Assur. 
Co.,  16  Wash.  232  (1896);  National 
Home,  etc.,  Ass'n  v.  Dwelling  House 
Ins.  Co.,  106  Mich.  236  (1895);  Conti- 
nental Ins.  Co.  v.  Wilson,  45  Kan. 
250,  23  Am.  St.  720  (1891);  Garrett- 
son  v.  Merchants',  etc.,  Ins.  Co. 
(Iowa),  86  N.  W.  32  (1901);  Chap- 
man v.  Rockford  Ins.  Co.,  89  Wis. 
572,  62  N.  W.  422,  28  L.  R.  A.  405 
(1895);  Phoenix  Ins.  Co.  v.  Carna- 


han,  63  Ohio  St.  258,  58  N.  E.  805 
(1900)  [citing  Old  Saucelito,  etc., 
Co.  v.  Commercial,  etc.,  Assur.  Co., 
66  Gal.  253,  5  Pac.  232  (1884); 
Uhrig  v.  Williamsburgh,  etc.,  Ins. 
Co.,  101  N.  Y.  362,  4  N.  E.  745 
(1886);  Hamilton  v.  Home  Ins.  Co., 
137  U.  S.  370  (1890)];  Randall  v. 
American  F.  Ins.  Co.,  10  Mont.  340, 
24  Am.  St.  50  (}391). 

140  Read  v.  State  Ins.  Co.,  103  Iowa 
307,  72  N.  W.  665,  64  Am.  St.  180 
(1897).  In  Zalesky  v.  Home  Ins. 
Co.,  102  Iowa  613,  71  N.  W.  566 
(1897),  the  policy,  after  providing 
for  arbitration,  provided  that  "no 
suit  or  action  on  this  policy  for  the 
recovery  of  any  claim  shall  be  sus- 
tainable in  any  court  of  law  or 
equity  until  after  full  compliance 
by  the  insured  with  all  the  forego- 
ing requirements."  The  court  said: 
"Nor,  in  the  absence  of  statute  pro- 
visions to  the  contrary,  can  it  be 
doubted  that,  under  a  policy  con- 
taining provisions  like  the  one  in- 
volved in  this  action,  an  appraise- 
ment is  a  condition  precedent  to 
the  bringing  of  an  action  on  the 
policy."  (Citing  numerous  cases.) 


§    320  THE    STANDARD    POLICY.  340 

only  be  brought  for  the  sum  named  by  the  arbitrator;  (2)  where  it 
is  agreed  that  no  action  shall  be  brought  until  there  has  been  an 
arbitration,  or  that  arbitration  shall  be  a  condition  precedent  to  the 
right  of  action.  In  all  other  cases,  where  there  is,  first,  a  covenant 
to  pay,  and,  secondly,  a  covenant  to  refer,  the  covenants  are  distinct 
and  collateral,  and  the  plaintiff  may  sue  on  the  first,  leaving  the  de- 
fendant to  bring  an  action  for  not  referring.'  This  court  has  recog- 
nized the  right  of  parties  to  bind  themselves  to  make  payment  of 
a  sum  to  be  fixed  or  estimated  by  an  arbitrator  or  third  person. 
Also,  the  right  to  make  arbitration  a  condition  precedent  to  the 
maintenance  of  an  action.  A  mere  provision  in  the  policy,  however, 
that,  in  event  of  a  disagreement,  the  amount  of  the  damage  shall 
be  ascertained  by  arbitrators,  will  not  prevent  the  assured  from  main- 
taining an  action,  unless  arbitration  is  made  by  the  terms  of  the 
policy  or  necessary  inference  therefrom  a  condition  precedent.  In 
such  a  case  the  agreement  to  arbitrate  is  collateral  to  the  main  pur- 
poses of  the  policy, — an  independent  agreement, — a  breach  of  which, 
while  it  will  support  a  separate  action,  can  not  be  pleaded  in  bar  to 
a  suit  on  the  principal  contract." 

In  a  later  case,  the  same  court  said:141  "This  policy  does  not  in 
express  terms  prohibit  the  bringing  of  an  action  until  an  arbitration 
is  had;  but  it  does  provide  that,  when  the  parties  can  not  agree,  the 
loss  shall  be  determined  by  arbitration,  and  that  the  sum  for  which 
the  company  is  liable  'shall  be  payable  sixty  days'  thereafter;  and  in 
another  place  it  provides  that  'until  sixty  days  after  the  *  *  *  award 
and  appraisal  herein  required  shall  have  been  rendered,  the  loss  shall 
not  be  payable.'  These  provisions  of  the  policy  clearly  imply  that  the 
loss  is  not  due  or  payable  until  sixty  days  after  the  appraisement  or 
award  is  returned.  If  the  loss  is  not  payable  until  such  time,  it  is 
equally  clear  that  suit  can  not  be  maintained  until  sixty  days  after 
the  award  is  returned.  Under  the  wording  of  this  policy,  we  think 
that  an  appraisement  and  an  award  was  a  prerequisite  to  the  main- 
tenance of  an  action  unless  it  was  waived,  or  submission  and  award 
was  prevented  by  the  acts  of  the  defendant." 

In  a  leading  case  in  the  supreme  court  of  the  United  States,  it 
was  held  that  a  provision  in  a  policy,  that  "in  case  differences  shall 
arise  touching  any  loss  or  damage  after  proof  thereof  has  been  re- 

141  George  Dee  &  Sons  Co.  v.  Key  City  F.   Ins.   Co.,   104   Iowa  167,   73 
N.  W.  594  (1897). 


341  ARBITRATION.  §    320 

ceived  in  due  form,  the  matter  shall,  at  the  written  request  of  either 
party,  be  submitted  to  arbitrators,  whose  award  in  writing  shall  be 
binding  on  the  parties  as  to  the  amount  of  such  loss  or  damage,  but 
shall  not  decide  the  liability  of  the  company  under  this  policy," 
can  not  be  pleaded  in  bar  of  an  action  on  the  policy  unless  it  is  fur- 
ther provided  that  no  such  action  shall  be  brought  until  after  the 
award.142 

Where  the  provision  was  that  "no  suit  or  proceeding  at  law  or  in 
equity  shall  be  brought  to  recover  any  sum  herein,  unless  the  same 
has  been  referred  to  the  arbitration  of  just  and  competent  men,"  and 
there  was  no  reference  and  no  request  for  the  same,  it  was  said:143 
"The  promise  is  not  to  pay  the  award,  but  a  sum  named,  and  the 
proviso  does  not  make  an  award  a  condition  precedent  to  the  promise 
to  pay,  but  to  the  mode  of  enforcing  that  promise.  It  is  well  settled 
that  such  an  agreement  is  not  a  bar  to  an  action  on  the  promise." 

The  New  Hampshire  form,  which  provides  for  a  compulsory  refer- 
ence, does  not  require  arbitration  as  a  condition  precedent  to  an  action 
on  the  policy,  although  a  statute  permits  a  suit  to  be  brought  by 
the  insured  if  not  satisfied  with  the  adjustment  made  by  the  in- 
surer.144 

Even  though  the  provision  for  arbitration  is  made  a  condition  prece- 
dent to  the  bringing  of  an  action  by  the  insured,  he  can  not  be  deprived 
of  his  right  of  action  by  the  misconduct  of  the  insurance  company. 
Thus,  a  refusal  by  the  arbitrator  appointed  by  the  company  to  appoint 
an  umpire,  which  virtually  amounts  to  a  refusal  to  proceed  with  the 
appraisal,  will  prevent  the  company  from  objecting  that  the  action 
was  brought  before  the  appraisement  was  concluded.145  So,  a  party 
whose  duty  it  is  to  choose  an  arbitrator  must  choose  one  who  will  act 
with  reasonable  promptness  in  naming  an  umpire,  or,  on  his  failure 
to  do  so,  replace  him  with  another.  A  party  to  a  controversy  who 
is  without  fault  can  not  be  made  to  suffer  through  the  inaction  of 
the  other  party.146 

142  Hamilton  v.  Home  Ins.  Co.,  137  P.  Ins.  Co.,  70  N.  H.  251,  47  Atl.  91 
U.  S.  370   (1890).  (1900). 

143  Badenfeld  v.  Massachusetts,  etc.,  145  Brock   v.    Dwelling   House   Ins. 
Ace.  Ass'n,  154  Mass.  77,  13  L.  R.  A.  Co.,  102  Mich.  583,  26  L.  R.  A.  623 
263    (1891);    Reed    v.    Washington,  (1894). 

etc.,  Ins.  Co.,  138  Mass.  572   (1885),        14°  Read  v.  State  Ins.  Co.,  103  Iowa 
and  cases  cited.  3v7,  64  Am.  St.  180  (1897). 

144  Franklin    v.     New    Hampshire 


§    321  THE   STANDARD   POLICY.  342 

§  321.  Revocation. — A  party  may  not  at  his  own  option  or  volition 
revoke  an  arbitration  or  submission  clause  any  more  than  he  may  the 
other  provisions  of  the  contract.147  But  a  contrary  view  obtains  in 
Pennsylvania  in  cases  where  the  persons  who  are  to  make  the  ap- 
praisal or  award  are  not  named  in  the  contract,  but  are  to  be  chosen 
thereafter  by  the  parties.148 

§  322.  Invalidity  of  the  award. — An  award  is  binding  upon  the 
parties,  unless  it  is  invalid,  and  the  burden  of  proof  is  upon  the 
party  asserting  its  invalidity.149  Before  an  award  made  by  arbitra- 
tors can  be  set  aside  and  declared  null  and  void,  it  must  clearly  appear 
that  the  arbitrators  who  made  the  award  were  guilty  of  misconduct, 
partiality  or  fraud.150 

In  an  action  brought  to  set  aside  an  award  and  appraisement,  made 
under  the  usual  provision  in  the  policy,  it  was  said:151  "An  agree- 
ment of  appraisal  is  a  contract.  Appraisers  who  make  an  award  un- 
der such  an  agreement  are  presumed  to  have  acted  in  accordance  with 
all  the  terms  of  the  contract,  and  the  burden  of  proof  is  on  those  who 
attack  their  award  to  establish  the  contrary  by  convincing  evidence. 
Every  reasonable  intendment  and  presumption  is  in  favor  of  the 
award,  and  it  should  not  be  vacated  unless  it  clearly  appears  that  it 
was  without  authority,  or  was  the  result  of  fraud  or  mistake,  or  of  the 
misfeasance  or  malfeasance  of  the  appraisers." 

Hence,  where  there  are  two  methods  by  which  a  result  may  have 
been  reached  by  arbitrators,  one  of  which  was  legal  and  authorized, 
and  the  other  illegal  and  unauthorized,  the  presumption  is  that  the 
legal  method  was  followed.152 

147  Chapman  v.  Rockford  Ins.  Co.,  1M  Barnard  v.  Lancashire  Ins.  Co., 
89  Wis.  572,  62  N.  W.  422,  28  L.  R.  101  Fed.  36,  41  C.  C.  A.  170  (1900); 
A.  405   (1895);   American,  etc.,  Ins.  Karthaus  v.  Ferrer,  1  Pet.   (U.  S.) 
Co.  v.  Landau    (N.  J.  Eq.),  49  Atl.  22    (1828);    Hartford  F.  Ins.  Co.  v. 
738    (1901).  Bonner  Merc.  Co.,  15  U.  S.  App.  134, 

148  Commercial,  etc.,  Assur.  Co.  v.  5  C.  C.  A.  524,  56  Fed.  378   (1893); 
Hocking,    115    Pa.    St.    407    (1886);  Blood  v.  Shine,  2  Fla.  127    (1848); 
Mentz  v.   Armenia  F.   Ins.   Co.,   79  Liverpool,  etc.,  Ins.  Co.  v.  Goehring, 
Pa.  St.  478,  21  Am.  Rep.  80   (1875).  99  Pa.  St.  13   (1881);   Tank  v.  Roh- 

149  Springfield,    etc.,     Ins.     Co.    v.  weder,  98  Iowa  154,  67  N.  W.   106 
Payne,    57    Kan.    291,    46    Pac.    315  (1896);     McDonald    v.    Arnout,    14 
(1896).  111.  58  (1852);  Golder  v.  Mueller,  22 

150 Hartford  F.  Ins.  Co.  v.  Bonner     111.  App.  527  (1887). 
Merc.  Co.,  44  Fed.  151,  11  L.  R.  A.         182  Barnard  v.  Lancashire  Ins.  Co., 
623   (1890).  101  Fed.  36,  41  C.  C.  A.  170   (1900). 


343 


ARBITRATION. 


§    322 


It  is  the  duty  of  each  party  to  act  in  good  faith  to  accomplish  the 
appraisement  in  the  way  provided  by  the  policy.  If  either  acts  in  bad 
faith,  so  as  to  defeat  the  real  object  of  the  clause,  it  absolves  the  other 
from  compliance  therewith.153  Where,  after  the  arbitrators  disagree, 


153  uhrig  v.  Williamsburgh,  etc., 
Ins.  Co.,  101  N.  Y.  362  (1886); 
Chainless  Cycle  Mfg.  Co.  v.  Security 
Ins.  Co.  (N.  Y.),  62  N.  E.  392  (1901)  ; 
Stemmer  v.  Scottish  Ins.  Co.,  33  Ore. 
65,  53  Pac.  498  (1898),  contains  a 
full  discussion  of  the  matter  of  mis- 
conduct of  arbitrators.  In  the 
course  of  the  decision  the  court 
said:  "Plaintiff  at  the  time  of 
Fisher's  appointment  knew  that  he 
resided  in  California,  and  if  his 
residence  tended  to  render  him  in- 
eligible, a  failure  to  except  to  him 
must  necessarily  be  deemed  a 
waiver  of  any  objection  on  that 
ground.  *  *  *  It  is  maintained 
that  the  inadequacy  of  the  award  is 
so  gross  as  to  warrant  the  court  in 
setting  it  aside.  In  Bradshaw  v.  Agri- 
cultural Ins.  Co.,  137  N.  Y.  137,  32 
N.  E.  1055  (1893),  the  court  having 
found  that  an  award  made  by  ap- 
praisers was  $989.61  less  than  the 
amount  of  the  damage  sustained  by 
a  fire,  and  that  an  appraiser  selected 
by  the  insurance  company,  whom  it 
falsely  represented  to  the  insured 
as  an  impartial  person,  was  not  dis- 
interested, set  aside  the  award;  but 
this  result  must  have  been  reached 
as  a  consequence  of  the  prejudice 
of  the  appraiser  instead  of  the  in- 
adequacy of  the  award,  or  perhaps 
the  combined  elements  of  prejudice 
and  inadequacy  afforded  the  reason 
for  the  decree  rendered.  If  an 
award  is  adequate,  the  assured  could 
not  be  injured  thereby,  and  hence  it 
would  seem  that  a  court  of  equity 
would  be  powerless  to  set  it  aside, 
however  prejudiced  the  appraisers 
may  have  been.  In  the  absence  of 


fraud  or  misconduct  on  the  part  of 
the  appraisers  in  the  discharge  of 
their  duties,  their  determination  is 
final  and  conclusive,  the  rule  being 
that  an  award  deliberately  and  hon- 
estly made  will  not  be  set  aside 
merely  for  excess:  Nutter  v.  Tay- 
lor, 78  Me.  424,  6  Atl.  835  (1886); 
Port  Huron,  etc.,  R.  Co.  v.  Callanan, 
61  Mich.  22,  34  N.  W.  678  (1886); 
Goddard  v.  King,  40  Minn.  164,  41 
N.  W.  659  (1889);  Ellicott  v.  Coffin, 
106  Mass.  365  (1871);  Davis  v. 
Henry,  121  Mass.  150  (1876);  Un- 
derbill v.  Van  Cortlandt,  2  Johns. 
Ch.  (N.  Y.)  339  (1817).  The  rule  is 
quite  general  that  the  exclusion  of 
pertinent  and  material  testimony  by 
the  appraisers  is  usually  fatal  to  the 
award:  Mosness  v.  German,  etc., 
Ins.  Co.,  50  Minn.  341,  52  N.  W.  932 
(1892);  Van  Cortlandt  v.  Under- 
bill, 17  Johns.  (N.  Y.)  405  (1819); 
Canfield  v.  Watertown  P.  Ins.  Co., 
55  Wis.  419,  13  N.  W.  252  (1862); 
Citizens'  Ins.  Co.  v.  Hamilton,  48 
111.  App.  593  (1892);  Hart  v.  Ken- 
nedy, 47  N.  J.  Eq.  51,  20  Atl.  29 
(1890).  An  exception  to  this  rule 
seems  to  be  that,  if  the  persons  se- 
lected as  appraisers  possess  pecul- 
iar skill  or  knowledge  concerning 
the  subject-matter,  and  it  appears 
that  the  parties  to  the  submission 
intended  to  rely  on  such  skill  or 
knowledge,  the  appraisers  will  be 
justified  in  refusing  to  hear  evi- 
dence: Hall  v.  Norwalk  F.  Ins.  Co., 
57  Conn.  105,  17  Atl.  356  (1889); 
but  however  this  may  be,  it  is  ad- 
mitted that  neither  of  said  apprais- 
ers possessed  any  peculiar  skill  or 
knowledge." 


§    322  THE    STANDARD    POLICY.  344 

the  one  appointed  by  the  insured  refuses  to  act  further,  the  insured 
should  at  once  appoint  another,  and  if  he  fails  to  do  so,  he  is  bound 
by  the  award  of  the  umpire  and  the  other  appraiser.154  The  tribunals 
provided  for  by  the  different  forms  of  policies  differ  in  their  organ- 
ization, and  hence  permit  different  methods  of  procedure. 

The  Xew  York  form  provides  that  two  disinterested  appraisers  be 
selected  by  the  parties  and  a  competent  and  disinterested  umpire  be 
selected  by  the  appraisers.  The  umpire  takes  no  part  in  the  matter 
until  the  issue  with  reference  to  which  there  is  a  disagreement  is 
submitted  to  him  by  the  appraisers.  Under  the  Massachusetts  form, 
the  company  and  the  insured  each  choose  one  out  of  three  persons 
to  be  named  by  the  other,  and  the  third  is  selected  by  the  two  so  chosen. 
The  three  are  known  as  referees,  and  act  together  in  the  considera- 
tion of  all  matters  submitted  to  them.  An  umpire  may  or  may  not 
be  an  arbitrator,  depending  upon  the  language  of  the  provision.  A 
technical  umpire  is  one  who  determines  the  whole  dispute  as  if  he 
had  been  originally  appointed  sole  arbitrator.  A  third  arbitrator 
must  act  with  the  others  throughout  the  hearing  and  simply  be  one  of 
a  majority. 

The  Minnesota  form  contemplates  and  provides  for  a  board  of 
referees,  to  be  made  up  of  disinterested  and  impartial  men,  chosen 
for  their  ability  and  fairness.  Such  a  board  is  a  #msi-court  and  is 
governed  by  the  rules  applicable  to  common  law  arbitrations. 

Where  two  of  the  referees  proceed  to  act  together  privately,  col- 
lecting information  and  examining  witnesses  without  regard  to  the 
third  referee,  and  finally  making  up  the  award  without  reference  to 
him,  and  where  evidence  is  received  by  the  full  board  without  afford- 
ing the  parties  sworn  an  opportunity  to  be  present  in  person  or  by 
counsel,  such  conduct  will  invalidate  the  award.  While  allowed  rea- 
sonable freedom  personally  to  inspect  the  ruins  of  the  fire  and  the 
debris  and  remnants,  and  the  damaged  goods,  for  the  purpose  of  apply- 
ing their  knowledge  in  considering  the  evidence,  the  inquiry  must  be 
conducted  by  the  board  in  the  usual  manner  of  receiving  evidence,  and 
the  examination  of  witnesses  must  be  conducted  in  the  presence  of  the 
interested  parties  and  their  counsel,  subject  to  the  tests  of  cross- 
examination.155 

154  American,  etc.,  Ins.  Co.  v.  Lan-  capacity,  and  must  be  free  from  bias 
dau  (N.  J.  Eq.),  49  Atl.  738  (1901).  in  favor  of  either  party:    Hickerson 

155  Christiansen  v.  Norwich  F.  Ins.  v.  German,  etc.,  Ins.  Co.,  96  Tenn. 
Co.  (Minn.),  88  N.  W.  16  (1901).  An  193,  32  L.  R.  A.  172   (1896).     As  to 
appraiser    acts    in    a  guast-judicial  what   is   meant   by   the   term   "dis- 


345  ARBITRATION.  §    322 

In  a  recent  case  in  Maryland  the  court  said:130  "Independently  of 
the  distinct  requirement  of  the  policy,  the  law  would  require  com- 
bined action  by  the  appraisers  who  were  selected  by  the  parties.  They 
occupied  the  position  of  arbitrators,  and  with  respect  to  the  duties 
of  arbitrators  the  law  is  fully  settled.  'All  must  be  present  through- 
out each  and  every  meeting,  equally  whether  the  meeting  be  for  the 
hearing  of  evidence,  or  arguments  of  the  parties,  or  for  consultation 
or  determination  upon  the  award.  The  disputants  are  entitled  to 
the  exercise  of  the  judgment  and  discretion,  and  to  the  benefit  of  the 
views,  arguments,  and  influence  of  each  one  of  the  persons  whom 
they  have  chosen  to  judge  between  them;  and  they  are  entitled  to 
these  not  only  in  the  award,  but  at  every  stage  of  the  arbitration, 
even  where  a  majority  are  empowered  to  decide.'  The  fact  that  the 
umpire  was  not  chosen  until  after  the  appraisement  had  been  begun 
would  not  have  invalidated  the  award.  The  substantial  requirement 
was  that  he  should  decide  the  differences  of  judgment  between  the 
appraisers.  The  time  at  which  he  was  appointed  could  not  injure 
any  one's  rights,  provided  he  was  on  hand  to  decide  the  differences 
between  the  other  two.  Although  the  direction  as  to  appointment 
was  not  strictly  followed  in  this  particular,  the  variation  did  not 
interfere  with  any  of  the  duties  which  he  was  appointed  to  perform, 
and  was  not  of  essential  importance." 

An  umpire  who  is  not  an  arbitrator  may  obtain  information  as  to 
certain  matters  from  the  experience  of  disinterested  persons  if  his  re- 
port correctly  expresses  his  own  judgment.  Where  the  policy  provided 
for  an  award  by  appraisers,  and  the  parties  subsequently,  by  a  Avritten 
instrument,  provided  a  method  of  procedure  for  the  umpire,  the 
court  said:157  "It  is  obviously  competent  for  the  parties  to  modify 
or  waive  any  provisions  of  their  written  contract  by  a  subsequent 
mutual  agreement  not  in  writing."  As  said  by  a  learned  author,  "the 
cases  are  numerous  to  show  that  an  arbitrator  may  submit  a  material 
question  affecting  the  merits  of  the  case  to  another,  and,  after  hear- 
ing his  opinion,  adopt  'it  as  his  own  upon  the  credit  that  he  gives  to 
the  credit  and  skill  of  the  person  to  whom  he  refers."158  In  a  leading 
case,  where  it  was  claimed  that  an  arbitrator  had  not  exercised  his  own 

interested,"   see   Brock  v.   Dwelling  157  Bangor   Sav.   Bank   v.   Niagara 

House    Ins.    Co.,    102    Mich.    583,    26  F.  Ins.  Co.,  85  Me.  68,  20  L.  R.  A. 

L.  R.  A.  623   (1894).  650  (1892). 

156  Caledonia  Ins.  Co.  v.  Traub,  83  I58  Russell    Arbitration    &    Award 

Md.  524,  35  Atl.  13  (1896).  (3d  ed.)   199. 


322 


THE    STANDARD    POLICY. 


346 


judgment,  it  was  said:  "That  alone  is  not  sufficient  to  prove  the 
award  bad,  for  a  man  may  make  use  of  the  judgment  of  another  upon 
whom  he  can  depend,  and  the  valuation  of  that  person  is  his  own  if 
he  chooses  to  adopt  it."159  But  an  award  is  avoided  where  the  ar- 
bitrators act  not  upon  their  own  volition  and  investigation,  but 
under  the  direction  of  one  of  the  parties.160  A  distinction  is  here 
made  between  an  umpire  and  a  third  arbitrator.  The  latter  must  act 
in  consultation  with  the  other  arbitrators,  while  an  umpire  may  act 
and  make  up  his  decision  alone.161 

Where  it  is  provided  that,  in  the  event  of  a  disagreement  between 
the  appraisers,  they  shall  submit  their  differences  to  an  umpire  chosen 
by  them,  there  is  implied  a  duty  on  the  part  of  the  umpire  to  examine 
and  consider  the  appraisement  of  each  party  in  arriving  at  his  own 
decision,  and  the  appraisement  will  be  set  aside  where  he  refused  to 
examine  the  estimate  made  by  an  appraiser  selected  by  the  insured, 
and  perfunctorily  accepted  that  of  the  appraiser  selected  by  the 
insurer.162 

An  appraisement  and  estimate  under  the  standard  form  of  fire 
insurance  can  not  be  set  aside  for  mere  inadequacy.163 

The  fact  that  an  award  was  not  made  under  oath,  as  provided  in 
the  policy,  is  not  sufficient  to  justify  setting  it  aside.164  So,  an 


168  Emery  v.  Wase,  5  Ves.  Jr.  846 
(1801). 

160  Hartford  F.  Ins.  Co.  v.  Bonner 
Merc.  Co.,  44  Fed.  151,  11  L.  R.  A. 
623  (1890). 

161  Hartford  F.  Ins.  Co.  v.  Bonner 
Merc.  Co.,  44  Fed.  151,  11  L.  R.  A. 
623  (1890),  note  on  Arbitration  and 
Award. 

162  Strome  v.  London  Assur.  Corp., 
20  App.  Div.   (N.  Y.)   571,  162  N.  Y. 
627,  57  N.  E.  1125  (1897). 

163  Strome  v.  London  Assur.  Corp., 
162  N.  Y.  627,  57  N.  E.  1125   (1900). 
In   Underbill   v.   Van    Cortlandt,    2 
John.    Ch.    339     (1817),    Chancellor 
Kent  said:     "Admitting  that  there 
was  no  corruption  or  partiality  in 
the  arbitrators,  and  admitting  that 
there  was  no  misconduct  in  them 
during  the   course   of  the  hearing, 
nor  of  fraud  in  the  opposite  party, 


then,  I  say,  the  court  can  not  in- 
quire into  the  charge  of  an  over 
or  undervaluation,  or  of  the  reason- 
ableness or  unreasonableness  of  the 
award,  but  it  is  binding  and  con- 
clusive. *  *  *  It  is  a  popular, 
cheap,  convenient  and  domestic 
mode  of  trial  which  the  courts 
have  always  regarded  with  liberal 
indulgence.  They  have  never  ex- 
acted from  these  unlettered  tribu- 
nals, this  rusticum  forum,  the  ob- 
servance of  technical  rule  and  for- 
mality. They  have  only  looked  to 
see  if  the  proceedings  were  honestly 
and  fairly  conducted,  and  if  that 
appear  to  be  the  case,  they  have 
uniformly  and  universally  refused 
to  interfere  with  the  judgment  of 
arbitrators." 

104  Barnard  v.  Lancashire  Ins.  Co., 
101  Fed.  36,  41  C.  C.  A.  170  (1900). 


347  ARBITRATION.  §    323 

award  will  not  be  disturbed  because  the  arbitrators  considered  a 
fact  which  was  not  a  proper  element  of  damage;  as,  that  the  knowl- 
edge of  the  public  that  the  goods  had  been  in  a  fire  would  affect  their 
value.165  So,  a  refusal  of  the  arbitrators  to  allow  the  owner  to  fur- 
nish any  information,  under  the  mistaken  impression  that  he  had 
waived  his  right  to  be  present,  does  not  constitute  a  ground  for  setting 
aside  the  award.166 

Where  each  of  the  two  arbitrators  and  the  umpire,  pursuant  to 
agreement,  wrote  on  a  slip  of  paper  his  estimate  of  the  damages,  and 
divided  the  aggregate  of  the  estimates  by  three,  it  was  held  that  the 
insurer  could  not  complain  where  the  result  was  the  exact  estimate 
made  by  the  umpire,  without  any  knowledge  on  his  part  of  the  opin- 
ion of  the  other  two  arbitrators.167 

As  already  noted,  the  proper  proceeding  before  a  tribunal  of  ar- 
bitration is  determined  by  the  character  of  the  tribunal  created  by 
the  terms  of  the  policy  in  controversy.  It  is  apparent  that  a  very 
different  procedure  may  be  proper  where  the  controversy  is  left  to  an 
umpire  from  that  which  would  be  legal  and  regular  before  a  quasi- 
judicial  tribunal  such  as  is  provided  for  by  the  Minnesota  form  of 
policy. 

§  323.  Waiver. — The  courts  are  not  loath  to  find  grounds  for  sup- 
porting a  waiver  of  the  right  to  arbitrate  on  the  part  of  the  insurance 
company.  Thus,  the  right  to  have  the  amount  of  damages  determined 
by  arbitration  is  waived  by  failing  to  respond  to  a  letter  of  the  in- 
sured demanding  an  appraisal;168  or  by  an  unreasonable  demand  by 
an  appraiser  for  the  company  that  an  umpire  be  chosen  who  does  n&t 
live  in  the  vicinity;169  or  by  neglect  to  demand  an  arbitration  within 
a  reasonable  time;170  or  by  a  refusal  to  permit  an  agreement  of  sub- 
mission to  arbitrators  to  be  changed  so  as  to  embrace  certain  prop- 

168.<Etna  F.   Ins.   Co.  v.   Davis,   21  1CO  Hickerson  v.  German,  etc.,  Ins. 

Ky.  L.  1456,  55  S.  W.  705   (1900).  Co.,  96  Tenn.  193,  33  S.  W.  1041,  32 

160Stemmer  v.   Scottish,  etc.,   Ins.  L.  R.  A.  172  (1896);  Brock  v.  Dwell- 

Co.,  33  Ore.  65,  53  Pac.  498   (1898).  ing  House  Ins.  Co.,  102  Mich.  583, 

But  see  Christiansen  v.  Norwich  F.  26  L.  R.  A.  623,  61  N.  W.  67  (1894). 

Ins.  Co.  (Minn.),  88  N.  W.  16  (1901).  17°  Vangindertaelen  v.  Phenix  Ins. 

167^tna   F.   Ins.   Co.   v.   Davis,    21  Co.,    82    Wis.    112,    33    Am.    St.    32 

Ky.  L.  1456,  55  S.  W.  705  (1900).  (1892);    Hayes  v.   Milford,   etc.,   F. 

108  Milwaukee,     etc.,     Ins.     Co.     v.  Ins.   Co.,   170   Mass.   492,   49   N.   E. 

Schallman,  188  111.  213,  59  N.  E.  12  754   (1898). 
(1900). 


THE    STANDARD   POLICY.  348 

erty  claimed  by  the  insured  to  be  covered  by  the  policy,  although  the 
company  denied  that  such  property  was  within  the  policy;171  or 
where,  after  a  failure  of  the  arbitrators  to  agree,  the  company  re- 
quests the  insured  to  make  out  proofs  of  loss  in  a  certain  amount, 
which  is  complied  with;172  or  by  a  refusal  to  submit  to  an  appraisal 
upon  an  offer  by  the  insured  after  a  previous  refusal  by  the  insured 
to  enter  into  an  arbitration;173  or  by  accepting  proofs  of  loss;174  or 
by  a  denial  of  all  liability;175  or  by  an  admission  of  liability,  except 
for  goods  which  it  claims  were  not  covered  by  the  policy.176  Where 
the  insured  made  and  submitted  proofs  of  loss  and  notified  the  com- 
pany that,  unless  it  adjusted  the  loss  or  agreed  to  an  appraisal  by  a 
named  date,  it  would  be  deemed  to  have  waived  such  appraisal,  and 
the  damaged  property  would  be  sold,  and  an  agent  of  the  company 
stated  that  he  did  not  demand  an  appraisal  by  which  to  settle  the 
controversy,  and  the  plaintiff,  relying  on  such  refusal,  sold  the  prop- 
erty and  thereafter  the  company  demanded  an  appraisal,  it  was  held 
that  the  matter  of  waiver  should  be  submitted  to  the  jury.177 

§  324.    Second  arbitration — Resubmission. — Where  the  policy  pro- 
vides that  an  offer  to  arbitrate  the  amount  of  the  damages  is  a  con- 

171  George  Dee  &  Sons  Co.  v.  Key  Manchester   F.   Assur.   Co.   v.   Koer- 

City  F.  Ins.  Co.,  104  Iowa  167,  73  N.  ner,  13  Ind.  App.  372,  40  N.  E.  1110, 

W.  594  (1897).  41   N.  E.  848    (1895);    American  F. 

172 Manchester    F.    Assur.    Co.    v.  Ans.  Co.  v.  Stuart   (Tex.),  38  S.  W. 

Koerner,  13  Ind.  App.  372,  40  N.  E.  395  (1896). 

1110,  41  N.  E.  848  (1895).  175  Hamberg  v.  St.  Paul,  etc.,  Ins. 

173Schrepfer  v.  Rockford  Ins.  Co.,  Co.,    68    Minn.    335,    71    N.    W.    388 

77  Minn.  291,  79  N.  W.  1005  (1899).  (1897);  JEtna  Ins.  Co.  v.  Simmons, 

In  this  case  it  was  held  that  a  re-  49  Neb.  811,  69  N.  W.  125    (1896); 

fusal  of  the  insured  to  enter  into  Baldwin  v.  Fraternal,  etc.,  Ass'n,  46 

arbitration,  which  was  a  condition  N.  Y.  Supp.  1016   (1897);   Stephens 

precedent  to  any  right  of  action  on  v.   Union  Assur.    Soc.,    16   Utah   22, 

the    policy,    was   a    waiver    of    her  50  Pac.  626    (1897).     But  see  Mur- 

right  to  an  appraisal,  but  not  an  ex-  phy  v.   Northern   British,   etc.,   Co., 

tinguishment    of    her    right    to    re-  61  Mo.  App.  323  (1895). 

cover    on    the    policy,    where    the  17<1  Westfield    Cigar    Co.    v.    Insur- 

insurer   had    not   been    deprived   of  ance   Co.,   169   Mass.   382,   47   N.   E. 

any  legal  right  or  suffered  any  dam-  1026  (1897). 

age  by  the  delay.  177  Chainless    Cycle    Mfg.    Co.    v. 

174  Virginia,  etc.,   Ins.  Co.  v.  Can-  Security   Ins.   Co.,   64   N.   Y.   Supp. 

non,  18  Tex.  Civ.  App.  588,  45  S.  W.  1060,    52    App.    Div.     (N.    Y.)     104 

945   (1898);   Hartford  F.  Ins.  Co.  v.  (1900),  affirmed  in  Ct.  of  App.,  62 

Cannon,    19    Tex.    Civ.    App.    305;  N.  E.  392  (1901). 


349  ARBITRATION.  §    324 

dition  precedent  to  the  right  to  maintain  an  action  on  the  policy,  a 
failure  of  the  arbitrators  selected  by  the  parties  to  agree  on  an  um- 
pire or  to  arrive  at  a  conclusion,  without  the  fault  of  either  party, 
does  not  justify  the  insured  in  refusing  to  proceed  with  the  arbitra- 
tion by  the  selection  of  a  new  arbitrator.  In  such  cases  the  provision 
for  arbitration  is  still  in  force,  and  the  necessary  steps  should  be 
taken  to  secure  a  new  appraisal.178  There  is  some  conflict  of  au- 
thority as  to  the  right  to  resubmission.  Courts  which  construe  the 
provision  strictly  as  an  attempt  to  restrict  the  general  right  of  a 
party  to  resort  to  the  courts,  hold  that  the  condition  has  been  com- 
plied with  when  the  arbitrators  are  appointed  as  provided  in  the 
policy.  "One  of  the  fundamental  and  essential  constitutional  rights 
of  a  citizen,"  says  Mr.  Justice  Caldwell,  "is  the  right  to  appeal 
to  a  court  of  justice  for  a  redress  of  his  grievances.  One  of  the  chief 
ends  of  government  is  to  secure  this  right  to  the  citizen.  While  some 
courts  hold  that  a  citizen  may  by  contract  bargain  away  this  right,  the 
agreement  to  do  so  will  not  be  extended  by  construction  or  implica- 
tion."179 

But  "the  law  undoubtedly  is,"  said  Mr.  Justice  Mitchell,180  "that, 
under  such  a  provision,  if  the  award  is  set  aside  for  misconduct  of  the 
arbitrators  not  participated  in  or  caused  by  the  insured,  the  agree- 
ment for  an  appraisement  still  remains  in  force>  and  a  new  appraise- 
ment, unless  it  had  become  impossible,  would  still  be  a  condition 
precedent  to  a  right  of  action  on  the  policy,  unless  waived." 

But  apparently  an  insurance  company  must  accept  the  insured's 
claim  that  the  award  is  invalid  or  take  the  risk  of  being  compelled 
to  sustain  the  contrary  view.  It  stands  by  the  award  at  its  peril. 
In  the  case  from  which  the  rule  was  just  quoted,  the  learned  judge 
said:  "Its  conduct  after  plaintiffs  rejected  the  award  clearly  con- 
stituted a  waiver  of  the  right  to  a  new  appraisement.  Not  only  did 
it  never  ask  for  or  even  suggest  a  new  appraisement,  but  in  its  com- 
munications with  the  plaintiffs  it  expressly  insisted  upon  the  award 

178  Westenhaver    v.    German,   etc.,  Hood  v.   Hartshorn,   100   Mass.   117 
Ins.  Co.  (Iowa),  84  N.  W.  717  (1900).  (1868);   Thorndike  v.  Wells  Memo- 

179  Western  Assur.   Co.  v.   Decker,  rial  Ass'n,  146  Mass.  619,  16  N.  E. 
98  Fed.  381,  39  C.  C.  A.  383   (1899).  747    (1888);    Davenport  v.  Long  Is- 

180Levine  v.   Lancashire  Ins.   Co.,  land  Ins.  Co.,  10  Daly   (N.  Y.)   535 

66  Minn.  138,  68  N.  W.  855    (1896)  (1882);     Uhrig    v.    Williamsburgh, 

[citing  Hiscock  v.  Harris,  80  N.  Y.  etc.,  Ins.  Co.,  101  N.  Y.  362,  4  N.  E. 

402  (1880);  Carrol  v/Girard  F.  Ins.  745  (1886)]. 
Co.,  72  Cal.  297,  13  Pac.  863  (1887); 


§    324  THE    STANDARD   POLICY.  350 

already  made,  and  notified  them  that  any  claim  under  the  policy 
must  be  on  that  basis  and  no  other.  It  took  the  same  position  in 
its  answer."  In  a  later  case/81  the  same  court  held  that  when  one 
of  the  parties  to  such  a  controversy  refuses  to  abide  by  the  award  on 
the  ground  of  misconduct  of  the  referees,  and  notifies  the  other  party 
of  that  fact,  stating  the  grounds  of  the  objection  and  demanding  a 
resubmission,  the  party  so  notified  has  the  option  to  stand  by  the 
award  or  submit  to  a  reappraisement,  and  if  he  so  elects  to  abide  by 
the  award,  and  the  same  is  adjudged  illegal  for  the  cause  assigned, 
then  there  can  be  no  resubmission  to  other  referees,  but  the  damages 
may  be  determined  in  an  action  brought  to  set  aside  the  award. 

The  insurance  company  attempted  to  avoid  a  waiver  by  inserting 
in  its  answer  a  demand  for  a  resubmission  of  the  controversy  to  ar- 
bitrators if,  for  any  reason  unknown  to  it,  the  award  should  be  held 
invalid.  In  reference  to  the  Levine  case,181a  the  court  said :  "In  that 
case  the  court  did  not  base  its  decision  upon  the  fact  that  the  defend- 
ant company  was  connected  with  the  fraud  of  the  referees,  but  held 
that  the  insurer  was  not  entitled  to  a  resubmission  to  another  board 
of  arbitration  for  the  reason  that  the  defendant,  by  its  conduct,  had 
waived  such  right  by  not  suggesting  a  new  appraisement  and  in  ex- 
pressly insisting  upon  the  award  as  made  and  notifying  the  insured 
that  any  claim  under  the  policy  must  be  on  the  basis  of  that  award 
and  no  other.  In  the  answer  in  that  case  defendant  made  no  sug- 
gestion of  reappraisement,  but  insisted  from  first  to  last  upon  the 
validity  of  the  award ;  whereas,  in  the  case  before  us,  appellant,  in  its 
answer,  after  denying  the  allegations  of  the  complaint  as  to  the  in- 
validity of  the  award,  asserted  that  it  was  valid  and  binding,  and 
alleged  that  if  such  award  should  be  declared  invalid,  then  that  ques- 
tion should  be  resubmitted.  The  demand  for  resubmission  was  con- 
ditioned on  the  result  of  the  action  and  was  of  no  importance.  In 
our  opinion,  the  Levine  case  lays  down  a  sound  principle,  and  one 
which  is  controlling  in  this  case,  which  is  to  the  effect  that  where 
the  award  is  attacked  on  the  ground  of  fraud  and  misconduct  by  a 
referee,  and  one  party  to  the  controversy  notifies  the  other  of  that  fact, 
demanding  a  reappraisement  on  account  of  such  misconduct,  it  then 
becomes  the  duty  of  the  other  party  to  investigate  the  validity  of  the 
charges  and  determine  whether  or  not  it  will  abide  by  it  or  submit  to 
a  reappraisement,  and  if  it  shall  determine  to  abide  by  the  award  and 

181  Christiansen  v.  Norwich  F.  Ins.  181a  Levine  v.  Lancashire  Ins.  Co., 
Co.  (Minn.),  88  N.  W.  16  (1901).  66  Minn.  138,  68  N.  W.  855  (1896). 


351  ARBITRATION.  §    324 

refuse  to  submit  to  a  reappraisement,  such  party  is  thereby  estopped 
from  thereafter  demanding  another  appraisement  in  case  the  charges 
so  made  shall  be  sustained." 

Not  only  is  a  party  who  is  not  at  fault  and  who  has  not  waived  his 
right  entitled  to  a  resubmission  of  the  amount  of  his  damages  to  arbi- 
trators, but,  after  an  unsuccessful  attempt,  arbitration  or  excuse  for 
not  arbitrating  is  still  a  condition  precedent  to  the  right  of  the  insured 
to  maintain  an  action  on  the  policy.  This  is  on  the  theory  that  until 
an  offer  has  been  made,  the  plaintiff  has  not  in  good  faith  done  all 
that  is  reasonably  within  his  power  to  have  the  agreement  carried 
into  effect,  and  the  damages  ascertained  in  the  mode  provided  for  in 
the  contract.  Hence,  where  the  determination  by  arbitration  of  the 
amount  of  the  loss  is  a  condition  precedent  to  a  right  of  action,  the 
plaintiff  in  an  action  on  the  policy  must  prove  performance  or  a 
valid  excuse  for  non-performance.  If  the  award  is  invalid  it  is  the 
duty  of  the  insured  to  seek  a  new  determination  of  the  amount  of 
the  loss  in  the  manner  provided  by  the  contract.  He  must,  therefore, 
allege  and  prove  either  that  the  amount  of  the  plaintiff's  loss  has 
been  determined  by  arbitrators  chosen  in  the  manner  stipulated  by 
the  parties  or  some  sufficient  reason  why  such  determination  has 
become  unnecessary  or  impossible.182 

But  in  a  case  in  the  circuit  court  of  appeals  the  policy  provided 
that  in  case  of  loss  and  disagreement  as  to  the  amount  thereof,  each 
party  should  appoint  an  appraiser,  and  the  two  suould  select  an 
umpire,  who  should  appraise  the  loss,  and  that  no  action  should  be 
maintained  on  the  policy  until  after  the  insured  should  have  fully 
complied  with  such  provision.  It  was  held  that  the  insured  dis- 
charged his  obligations  when  he  appointed  an  appraiser  in  good 
faith;  and  if  the  appraisement  failed  without  his  fault,  he  was 
not  required  to  propose  the  selection  of  other  appraisers,  but  might 
resort  to  the  courts  to  have  his  damages  assessed.183  So,  it  was  said 
in  Maryland  that  "if  the  appraisement  fail  without  the  fault  of  the 
insured,  the  failure  would  not  be  an  impediment  to  their  right  to 
recovery  if  they  could  maintain  their  suit  on  other  grounds."184  So, 
in  North  Carolina  it  was  said:  "Where  the  arbitrators,  or  a  ma- 
jority of  them,  fail  to  agree  upon  an  award,  the  plaintiff,  unless  he 
is  shown  to  have  acted  in  bad  faith  in  selecting  his  arbitrator,  is  not 

182  Fischer  v.  Merchants'   Ins.  Co.  Caledonia  Ins.  Co.  v.  Traub,  83  Md. 
(Me.),  50  Atl.  282  (1901).  524,  35  Atl.  13  (1896). 

183  Western  Assur.  Co.  v.   Decker,  184  Caledonia  Ins.  Co.  v.  Traub,  83 
98  Fed.  381,  39  C.  C.  A.  383   (1899);  Md.  524,  35  Atl.  13    (1896). 


§    325  THE    STANDARD   POLICY.  352 

compelled  to  submit  to  another  arbitration  and  another  delay,  but 
may  forthwith  bring  his  action  in  the  courts."184a 

But  where  the  arbitration  fails  through  the  misconduct  of  one  of 
the  parties,  he  is  not,  after  the  award  is  set  aside,  entitled  to  a  resub- 
mission.  This  is  recognized  by  all  the  courts.185 

Where  the  policy  provides  that  the  loss  shall  be  ascertained  by  ar- 
bitration, and  that  any  proceeding  relative  to  such  arbitration  shall 
not  be  deemed  a  waiver  of  any  condition  of  the  policy,  the  company, 
by  denying  liability  after  an  appraisement  of  the  loss,  does  not  waive 
its  right  to  insist  upon  the  appraisement  as  conclusive  of  the  amount 
of  the  loss.18(i 

§  325.  Demand  for  arbitration  as  admission  of  liability. — An  in- 
surance company  can  not  demand  an  appraisal  and  arbitration  of  the 
amount  of  the  loss,  and  at  the  same  time  deny  all  liability  under 
its  policy.  Therefore,  as  there  can  be  nothing  to  arbitrate  where 
there  is  no  liability,  a  demand  for  an  appraisal  by  the  insurer,  unless 
the  contract  provides  to  the  contrary,  is  a  waiver  of  all  defenses  going 
to  the  question  of  liability.187  But  the  standard  form  provides  that 
the  company  shall  not  be  held  to  have  waived  any  condition  or  con- 

184a  pretzf elder  v.   Merchants'   Ins.  172    (1896);    McCullough  v.  Phoenix 

Co.,    116    N.    C.    491,    21    S.    E.    302  Ins.  Co.,  113  Mo.  606  (1893). 

(1895).  18tf  Pretzf  elder   v.    Merchants'    Ins. 

185  "Any    attempt    on    the    part   of  Co.,    116    N.    C.    491,    21    S.    E.    302 

either   party   to   misuse   or   pervert  (1895);    citing  Howard   Ins.    Co.  v. 

the  provisions  of  the  standard  pol-  Hocking,  115  Pa.  St.  415,  8  Atl.  592 

icy   for  an   appraisal   so   as  unrea-  (1886). 

sonably  to  delay  an  adjustment,  1ST  Hickerson  v.  German,  etc.,  Ins. 
or  to  secure  an  unjust  abatement  Co.,  96  Tenn.  193,  32  L.  R.  A.  172 
of  an  honest  loss,  is  a  breach  of  (1896)  [citing  Lasher  v.  Northwest- 
good  faith  and  should  be  treated  ern,  etc.,  Ins.  Co.,  18  Hun  (N.  Y.) 
as  a  waiver  of  the  condition  and  as  98  (1879);  Rosenwald  v.  Phoenix 
dispensing  with  the  necessity  of  an  Ins.  Co.,  50  Hun  (N.  Y.)  172  (1888); 
appraisal,  or  warranting  a  resort  to  Western,  etc.,  Ins.  Co.  v.  Putnam,  20 
an  action  without  one,  if  the  party  Neb.  331  (1886);  Bailey  v.  JEtna 
thus  prejudiced  has  used  all  fair  Ins.  Co.,  77  Wis.  336  (1890);  Ger- 
and  reasonable  means  and  diligence  man,  etc.,  Ins.  Co.  v.  Etherton,  25 
on  his  part  to  secure  it.  To  hold  Neb.  505  (1889);  Wainer  v.  Milford, 
otherwise  would  be  to  permit  the  etc.,  Ins.  Co.,  153  Mass.  335,  11  L.  R. 
party  in  fault  to  profit  by  his  own  A.  599  (1891),  and  note;  Farnum  v. 
wrong:"  Chapman  v.  Rockford  Ins.  Phoenix  Ins.  Co.,  83  Cal.  246  (1890); 
Co.,  89  Wis.  572,  28  L.  R.  A.  405  Savage  v.  Phoenix  Ins.  Co.,  12  Mont. 
(1895);  Hickerson  v.  German,  etc.,  458,  33  Am.  St.  591  (1892),  and 
Ins.  Co.,  96  Tenn.  193,  32  L.  R.  A.  note]. 


353 


RIGHT    TO    REPAIR,    REBUILD,    OR    REPLACE. 


§    326 


ditions  of  the  policy,  or  any  forfeiture  thereof,  by  any  requirement, 
act  or  proceeding  on  its  part  relating  to  the  appraisal.1873 

§  326.  Right  of  mortgagee. — Where  a  policy  is  taken  out  by  a 
mortgagor  and  delivered  to  a  mortgagee,  with  an  indorsement  to  the 
effect  that  loss,  if  any,  should  be  payable  to  the  mortgagee,  the  mort- 
gagee need  not  be  a  party  to  the  arbitration.  The  contract  is  be- 
tween the  mortgagor  and  the  insurance  company,  and,  unless  it  con- 
tains provisions  to  the  contrary,  is  under  the  control  of  the  mort- 
gagor.188 

XIX.     Eight  to  Repair,  Rebuild,  or  Replace. 

It  shall  be  optional,  however,  with  this  company  to  take  all,  or  any 
part,  of  th&  articles  at  such  ascertained  or  appraised  value,  and  also  to 
repair,  rebuild,  or  replace  the  property  lost  or  damaged  with  other  of 
like  kind  and  quality  within  a  reasonable  time  on  giving  notice, 
within  thirty  days  after  the  receipt  of  the  proof  herein  required,  of 
its  intention  so  to  do;  but  there  can  be  no  abandonment  to  this  com- 
pany of  the  property  described.189 


187a  See  §  301,  supra. 

188Chandos  v.  American  F.  Ins. 
Co.,  84  Wis.  184,  19  L.  R.  A.  321 
(1893).  In  Hathaway  v.  Orient  Ins. 
Co.,  134  N.  Y.  409,  17  L.  R.  A.  514 
(1892),  it  was  held  that  the  rights 
of  a  mortgagee  could  not  be  de- 
feated by  an  accord  and  satisfaction 
between  the  insurer  and  the  owner 
of  the  premises,  who  took  out  the 
policy  in  his  own  name.  See  gen- 
erally, as  to  the  question  of  the 
effect,  upon  an  assignee  of  an  in- 
surance policy,  of  acts  of  forfeiture 
by  the  assignor,  note  to  Hall  v. 
Niagara  F.  Ins.  Co.,  93  Mich.  184,  in 
18  L.  R.  A.  135  (1892).  Contra, 
Bergman  v.  Commercial  Assur.  Co., 
92  Ky.  494,  15  L.  R.  A.  270  (1892). 
See  Brown  v.  Hartford  Ins.  Co.,  5 
R.  I.  394  (1858);  Harrington  v. 
Fitchburg,  etc.,  Ins.  Co.,  124  Mass. 
126  (1878). 

180  This  provision  is  found  in  the 
standard  policies  in  use  in  New 
23 — ELLIOTT  INS. 


York,  New  Jersey,  Connecticut, 
Rhode  Island,  Michigan,  South  Da- 
kota, Louisiana,  North  Dakota, 
Wisconsin  and  North  Carolina.  The 
Iowa  clause  is  s-'milar  to  that  of 
New  York,  except  that  the  company 
is  not  authorized  to  repair,  or  re- 
build in  case  of  the  total  loss  of 
the  building.  The  following  pro- 
vision is  found  in  the  standard 
policies  of  the  states  of  Massachu- 
setts, Minnesota  and  Maine:  "In 
case  of  loss  or  damage,  the  com- 
pany, within  sixty  days,  *  *  * 
shall  either  pay  the  amount  *  *  * 
or  replace  the  property  with  other 
of  the  same  kind  and  goodness,  or 
it  may  within  fifteen  days  after 
such  statement  has  been  submitted, 
notify  the  insured  of  its  intention 
to  rebuild  or  repair  the  premises, 
or  any  portion  thereof  separately 
insured  by  this  policy,  and  shall 
thereupon  enter  upon  said  premises 
and  proceed  to  repair  or  rebuild 


§    327  THE    STANDARD    POLICY.  354 

§  327.  An  option  reserved. — After  the  damaged  property  is  ap- 
praised as  provided  by  statute,  the  company  reserves  the  right  to  take 
the  articles  or  any  part  thereof  at  such  appraised  value.  It  also 
reserves  an  option  to  repair,  rebuild  or  replace  the  property  lost  or 
damaged  with  other  of  like  kind  and  quality  within  a  reasonable  time 
on  giving  notice,  within  thirty  days  after  receipt  of  proofs,  of  its  in- 
tention so  to  do.  The  right  to  rebuild  does  not  exist  unless  reserved 
by  the  terms  of  the  contract.190  The  insurer  can  elect  either  of  the 
privileges  reserved  to  it  by  this  provision  of  the  policy,  but  by  the 
selection  of  one  it  abandons  the  others.  Thus,  where  the  policy  con- 
tained a  provision  for  the  submission  of  certain  matters  to  arbitration, 
and  provided  that  it  "should  be  optional  with  the  company  to  repair, 
rebuild  or  replace  the  property  with  other  of  like  kind  and  quality 
within  a  reasonable  time,"  the  company  elected  to  repair  the  injury 
and  restore  the  house  to  its  former  condition.  After  some  work  was 
done,  defendant  was  informed  that  the  repairs  were  completed.  The 
insured  claimed  that  the  repairs  were  insufficient,  but  declined  to 
specify  in  what  particular.  The  company  made  several  attempts  to 
complete  the  repairs,  which  were  unsatisfactory  to  the  defendant, 
who  made  and  served  proofs  of  loss  and  claimed  payment  of  the 
money.  The  defendant  then  requested  that  the  matter  of  damages 
be  submitted  to  arbitration.  The  court  said:191  "The  insurers  had 
the  right  to  determine  the  manner  in  which  they  would  perform 
their  contract,  and  this  right  did  not  depend  upon  the  assent  of  the 
insured.  Neither  his  assent  nor  dissent  could  affect  the  power  of  the 
defendant  under  the  contract.  The  rights  of  the  parties  rested  alto- 
gether in  contract,  and  the  defendant  assumed  the  responsibility 
of  performing  it  according  to  its  terms,  subject  to  the"  right  of  the 
insured  to  damages  for  any  breach  of  performance.  *  *  *  One 
mode  looked  to  the  compensation  of  the  insured  by  the  payment  of 

the    same    with    reasonable    expedi-  cept  that  it  limits  the  time  within 

tion.      It    is    moreover    understood  which  the  company  can  give  notice 

that  there  can  be  no  abandonment  of   its   intention   to   rebuild   to   ten 

of  the  property  insured  to  the  com-  days. 

pany,   and  that  the  company   shall        19°  Wynkoop    v.    Niagara    P.    Ins. 

not,  in  any  case,  be  liable  for  more  Co.,    91    N.    Y.    478,    Woodruff    Ins. 

than  the  sum  insured,  with  interest  Gas.  203  (1883).   See  Wallace  v.  Ins. 

thereon  from  the  time  when  the  loss  Co.,  4  La.  289   (1832). 

shall  become  payable,  as  above  pro-        m  Wynkoop  v.  Niagara  F.  Ins.  Co., 

vided."       The  New  Hampshire  pro-  91  N.  Y.  478  (1883). 

vision  is  similar  *o  the  above  ex- 


355  EIGHT    TO    KEPAIR,    REBUILD,   OR   REPLACE.  §    327 

damages  for  his  loss,  and  the  other  to  the  restoration  of  the  subject  of 
the  insurance  to  its  former  condition.  It  could  not  have  been  con- 
templated by  the  parties  that  both  methods  of  performance  were  to 
be  pursued.  The  selection  by  the  defendant  of  one  of  these  alterna- 
tives necessarily  constituted  an  abandonment  of  the  other.  The 
election  of  the  privilege  of  restoration  involved  the  rejection  not  only 
of  the  right  to  discharge  its  liability  by  the  payment  of  damages  to  the 
insured,  but  also  of  those  provisions  of  the  contract  having  reference 
to  that  method  of  performance.  From  the  time  of  such  election  the 
contract  between  the  parties  became  an  undertaking  on  the  part  of  the 
defendant  to  build  or  repair  the  subject  insured  and  to  restore  it  to  its 
former  condition,  and  the  measure  of  damages  for  a  breach  of  the 
substituted  contract  did  not  necessarily  depend  upon  the  amount  of 
damages  inflicted  upon  the  house  by  the  peril  insured  against." 

After  the  company  elects  to  rebuild  the  contract  becomes  one  for 
rebuilding,  and  the  obligation  which  looks  to  the  payment  of  money 
becomes  obsolete  and  inapplicable,  and  the  case  then  becomes  what  it 
would  have  been  if  the  contract  had  simply  obligated  the  defendant 
to  rebuild  in  case  of  loss.192  The  option  must  be  exercised  within 
a  reasonable  time,  and  notice  must  be  given  within  thirty  days  after 
the  receipt  of  the  proofs.  An  offer  by  the  company,  more  than  a  year 
after  the  proofs  of  loss  were  furnished,  to  rebuild,  is  too  late.193 

Where  two  separate  companies  elect  to  rebuild,  and  there  is  a 
breach  of  the  new  contract  to  rebuild,  the  owner  may  recover  his  full 
damages  against  either  of  them,  leaving  the  one  which  pays  to  secure 
contribution  from  the  other  in  a  separate  action.194  Where  separate 
companies  have  separate  policies  on  a  single  building,  a  general  elec- 
tion to  repair  and  rebuild  makes  the  obligation  to  repair  and  rebuild 
joint  or  several  at  the  option  of  the  insured.195 

There  is  some  doubt  as  to  whether  the  insurer  is  deprived  of  the 
right  to  rebuild  reserved  in  the  policy  by  the  fact  that  there  is  a  statute 
requiring  the  use  of  a  valued  policy.  In  Wisconsin  the  standard  form 
limits  the  liability  of  the  insured  to  the  "actual  cash  value  of  the 
property  at  the  time  any  loss  or  damage  occurs,"  except  "as  other- 
wise provided  by  statute,"  and  provides  that  such  liability  "shall  in  no 

192Morrell  v.  Irving  F.  Ins.  Co.,  33  mel,  89  Md.  437,  43  Atl.  764   (1899). 

N.  Y.  429  (1865).    See,  also,  Beals  v.  1M  Morrell  v.  Irving  F.  Ins.  Co.,  33 

Home  Ins.  Co.,  36  N.  Y.  522  (1867);  N.  Y.  429   (1865). 

Heilmann  v.   Westchester   Ins.   Co.,  m  Hartford  F.  Ins.  Co.  v.  Peebles 

75  N.  Y.  7  (1878).  Hotel  Co.,  82  Fed.  546,  27  C.  C.  A. 

183  Maryland,  etc.,  Ins.  Co.  v.  Kim-  223   (1897). 


§    327  THE    STANDARD    POLICY.  356 

event  exceed  what  it  would  then  cost  the  insurer  to  repair  and  replace 
the  same  with  other  of  like  kind  and  quality/'  and  that  "it  shall  be 
optional,  however,  with  the  insurer  to  rebuild  or  replace  the  property 
lost  or  damaged  with  other  of  like  kind  and  quality."  When  the 
policy  was  issued  there  was  in  force  a  statute  which  declared  that  the 
amount  of  insurance  written  in  the  policy  on  real  estate  which  has  been 
wholly  destroyed  "shall  be  taken  conclusively  to  be  the  true  value  of 
the  property  when  insured,  and  the  true  measure  of  damages  when 
destroyed."  It  was  held  that  these  acts  should  be  construed  together, 
and  that  the  provision  for  a  valued  policy  was  not  in  conflict  with  the 
provision  giving  the  insured  the  right  to  rebuild  although  the  building 
was  wholly  destroyed.196  But  in  Ohio  the  right  to  rebuild  is  regarded 
as  inconsistent  with  the  valued  policy  statute,  as  it  changes  the  meas- 
ure of  liability  from  the  amount  named  in  the  policy  to  the  cost  of 
rebuilding.19681 

Where  there  was  a  controversy  between  the  insured  and  insurer  as 
to  whether  the  latter  had  lost  its  right  to  elect  to  rebuild,  the  former 
brought  an  action  to  recover  a  money  indemnity,  and  the  insurer 
set  up  its  election  and  alleged  its  willingness  to  rebuild.  It  was  held 
that  the  company  had  not  lost  its  right,  and  could  not  thereafter 
rescind  the  position  assumed  in  the  pleading  and  deny  liability  on  its 
contract  of  insurance  because  pending  the  controversy  the  cost  of 
building  had  increased.197  In  the  same  case  it  appeared  that  the 
policy  contained  provisions  relating  to  both  personal  property  and 
buildings,  and  provided  that  if  there  was  loss  or  damage  the  amount 
of  the  same  should  be  ascertained  or  estimated  by  the  parties  or  by 
appraisers,  and  that  when  so  estimated  and  the  proofs  of  loss  made, 
the  same  should  be  payable  sixty  days  after  receipt  of  these  proofs,  but 
that  it  should  be  "optional,  however,  with  this  company  to  take  all 
or  any  part  of  the  articles  at  such  ascertained  or  appraised  value,  and 
also  to  repair,  rebuild  or  replace  the  property  lost  or  damaged 
*  *  *  within  a  reasonable  time  on  the  giving  of  notice  within 
thirty  days  after  the  receipt  of  proofs  of  loss  herein  required,  of  its 
intention  so  to  do."  It  was  further  provided  that  the  company  should 
be  held  to  have  waived  any  provision  or  condition  of  the  policy  by 
any  act  or  requirement  or  proceeding  relative  to  appraisement.  It 
was  held  that  the  estimate  and  the  appraisal  was  preliminary  to  or  a 

199  Temple  v.  Niagara  F.  Ins.  Co.,  197  Langan  v.  ^Etna  Ins.  Co.,  99 
109  Wis.  372,  85  N.  W.  361  (1901).  Fed.  374  (1900). 

196a  Milwaukee,    etc.,    Ins.    Co.    v. 
Russell  (Ohio),  62  N.  B.  338  (1901). 


357  TIME    WITHIN    WHICH    LOSS    IS    PAYABLE.  §    328 

part  of  the  final  proof  of  loss  required,  and  that  participation  by  the 
company  in  the  appraisal  to  ascertain  the  damage  done  to  the  insured 
building  did  not  constitute  an  election  on  its  part  to  pay  the  dam- 
ages in  money,  which  precluded  it  from  thereafter  exercising  its 
option  to  rebuild  or  repair  upon  the  giving  of  proper  notice.198 

No  deduction  can  be  made  for  difference  in  value  between  the  old 
and  the  new  building  constructed  by  the  company  under  the  option 
reserved  in  this  policy.  Where  the  company  elected  to  rebuild,  it 
was  claimed  that  as  a  new  store  of  similar  dimensions  and  plan  as  the 
old,  of  new  materials,  would  be  worth  more  than  the  old  one,  a  deduc- 
tion ought  to  be  made  from  the  estimate  of  the  cost  of  the  new  store 
for  the  difference  in  value  between  the  old  and  the  new  store,  anal- 
ogous to  the  deduction  of  new  for  the  old  in  the  adjustment  of  losses 
on  marine  policies.  "Such  a  rule,"  said  the  court,*99  "is  not  sup- 
ported by  any  principle  of  justice  or  by  the  authority  of  any  adjudged 
cases.  It  is  founded  upon  an  erroneous  construction  of  the  con- 
tract. It  supposes  that  the  insurers  are  bound  to  repair  the  build- 
ing or  to  pay  the  expenses  of  the  repairs.  But  no  such  obligation  is 
imposed  upon  them  by  the  policy.  They  have  the  privilege  to  make 
requisite  repairs,  if  they  see  fit,  to  protect  themselves  against  the 
recovery  of  excessive  damages,  or  for  any  other  reason.  But  if  they 
elect  -not  to  make  repairs,  they  are  liable  only  to  pay  a  fair  indem- 
nity for  the  loss.  But  whatever  may  be  the  rule  when  the  building 
insured  is  partially  injured  by  the  peril  insured  against,  it  has  no 
application  to  cases  like  the  present,  where  the  building  is  totally 
destroyed  and  is  to  be  replaced  by  a  new  one.  We  are 

therefore  of  the  opinion  that  there  is  no  rule  of  damages  applicable 
to  the  present  case;  and  that  in  all  cases  where  no  rule  of  damages 
is  established  by  law,  the  jury  are  to  decide  upon  the  question,  and 
that  to  their  decision  there  can  be  no  legal  exception." 

XX.     Time  Within  Which  Loss  is  Payable. 

And  the  loss  shall  not  become  payable  until  sixty  days  after  the 
notice,  ascertainment.,  estimate,,  and  satisfactory  proof  of  the  loss 
herein  required  have  been  received  by  this  company,  including  an 
award  by  appraisers  when  appraisal  has  been  required.200 

108Langan  v.  ^Etna  Ins.  Co.,  96  20°  This  provision  is  found  in  the 

Fed.  705  (1899).  standard  policies  of  New  York,  New 

199  Brinley  v.  National  Ins.  Co.,  11  Jersey,  Rhode  Island,  Connecticut, 

Mete.  (Mass.)  195  (1846).  Iowa,  South  Dakota,  North  Dakota, 


§    328  THE    STANDARD    POLICY.  358 

§  328.  In  general. — The  insurance  company  has  sixty  days  after 
due  proof  of  loss  and  award  by  appraisers,  when  appraisal  has  been 
required,  within  which  to  pay  the  amount  found  due,  and  a  suit 
commenced  before  the  expiration  of  the  sixty  days  is  prematurely 
brought.201  The  Michigan  statute  provides  that  suits  at  law  may  be 
maintained  against  the  insurer  for  claims  which  may  have  accrued, 
if  payments  are  withheld  more  than  sixty  days  after  such  claims  be- 
come due.  Where  the  sum  for  which  the  company  might  be  liable 
was  payable  sixty  days  after  due  notice,  it  was  held  that  an  action 
commenced  on  November  24  for  a  loss  by  fire,  proofs  of  which  were 
furnished  on  September  9,  was  premature,  as  the  action  did  not  lie 
until  the  expiration  of  one  hundred  and  twenty  days  from  the  time 
the  proofs  of  loss  were  filed.202 

Where  the  policy  provided  that  the  loss  should  be  paid  within  sixty 
days  after  receiving  proofs  of  loss,  and  a  complaint  was  filed  August 
30,  which  alleged  that  the  plaintiff  notified  the  company  of  the  loss 
on  June  23,  and  that  its  adjuster  two  or  three  days  thereafter  made 
inquiry  into  the  facts  and  notified  the  plaintiff  that  the  loss  could 
not  be  paid,  it  was  held  that  the  action  was  not  prematurely  brought.203 

Where  the  policy  contains  no  reference  to  the  charter  of  a  mutual 
company,  the  rights  of  the  parties  are  determined  by  this  provision 
in  the  policy,  and  not  by  some  charter  provision  which  provides  for 
a  different  procedure.204  An  action  may  be  brought  without  waiting 
for  the  expiration  of  the  sixty  days  after  proofs  of  loss  where  the 
company  denies  all  liability,  and  refuses  to  ascertain  or  adjust  the 
loss,  and  its  officer  states  that  the  only  way  a  settlement  can  be  ob- 
tained is  "at  the  end  of  a  lawsuit."205 

Michigan,  Louisiana  and  North  Car-  pay  the  amount  for  which  it  shall 

olina.    The  Wisconsin  clause  reads,  be  liable  or  replace,"  etc. 

"and  the  loss  shall  become  payable  201  Gillon  v.   Northern  Assur.  Co., 

sixty  days  after  the  notice  and  proof  127  Cal.  480,  59  Pac.  901   (1900). 

of  loss  herein   required   have   been  202  Putze  v.  Saginaw,  etc.,  Ins.  Co. 

received  by  this  company."    Massa-  (Mich.),  86  N.  W.  814  (1901). 

chusetts,  Minnesota,  Maine  and  New  203  Home  Ins.  Co.  v.  Sylvester,  25 

Hampshire  have  the  following  pro-  Ind.  App.  207,  57  N.  E.  991   (1900). 

vision :      "In    case   of   any   loss   or  2<*  First    Baptist    Church    v.    Citi- 

damage,  the  company,  within  sixty  zens',  etc.,  Ins.  Co.,  119  Mich.  203,  77 

days  after  the  insured   shall   have  N.  W.  702   (1899). 

submitted  a  statement,  as  provided  ^  Hosmer  v.  St.  Joseph,  etc.,  Ins. 

in  the  preceding  clause,  shall  either  Co.,  80  Mo.  App.  419  (1899). 


359 


TIME    OF    BRINGING    SUIT. 


§    329 


XXI.     Time  of  Bringing  Suit. 

No  suit  or  action  on  this  policy.,  for  the  recovery  of  any  claim,  shall 
be  sustainable  in  any  court  of  law  or  equity  until  after  full  compliance 
by  the  insured  with  all  the  foregoing  requirements,  nor  unless  com- 
menced within  twelve  months  next  after  the  fire.2™ 

§  329.  Validity. — It  is  generally  held  that  a  provision  in  a  policy 
of  insurance  limiting  the  time  for  an  action  thereon  to  a  period  less 
than  that  prescribed  by  the  statute  of  limitations  is  valid  and  en- 
forceable,207 although  in  a  few  instances  such  provisions  have  been 
held  void  as  against  public  policy.208 


2o«  This  provision  is  found  in  the 
standard  policies  of  New  York,  New 
Jersey,  Rhode  Island,  Connecticut, 
Michigan,  Louisiana,  South  Dakota 
and  North  Carolina.  The  clause 
does  not  appear  in  the  Wisconsin 
standard  policy,  and  North  Dakota 
has  no  time  limit  other  than  the 
statute  of  limitations  within  which 
suit  must  be  brought.  The  Iowa 
form  is  as  follows:  "No  suit  or 
action  on  this  policy  for  the  recov- 
ery of  any  claim  shall  be  sustainable 
in  any  court  of  law  or  equity  until 
after  full  compliance  by  the  insured 
with  all  the  foregoing  requirements, 
including  appraisal,  and  until  after 
an  award  shall  have  been  obtained 
fixing  the  amount  of  such  claim  in 
the  manner  above  provided,  when 
the  company  has  elected  to  appraise, 
nor  unless  commenced  not  later 
than  one  year  next  after  the  time 
when  a  cause  of  action  accrues." 
The  Massachusetts,  Minnesota  and 
Maine  policies  provide  that:  "No 
suit  or  action  against  this  company 
for  the  recovery  of  any  claim  by 
virtue  of  this  policy  shall  be  sus- 
tained in  any  court  of  law  or  equity 
in  this  state  unless  commenced 
within  two  years  from  the  time  the 
loss' occurs."  New  Hampshire  lim- 
its the  time  for  bringing  the  ac- 
tion to  one  year. 

207  Riddlesbarger  v.  Hartford  Ins. 


Co.,  7  Wall.  (U.  S.)  386,  Woodruff 
Ins.  Cas.  211  (1868);  Morrill  &  Co. 
v.  New  England  F.  Ins.  Co.,  71  Vt. 
281,  44  Atl.  358  (1899);  Guthrie  v. 
Connecticut  Indem.  Ass'n,  101  Tenn. 
643,  49  S.  W.  829  (1898);  Peoria, 
etc.,  Ins.  Co.  v.  Whitehill,  25  111.  382 
(1861);  Williams  v.  Vermont,  etc., 
Ins.  Co.,  20  Vt.  222  (1848);  Wilson 
v.  JEtna  Ins.  Co.,  27  Vt.  99  (1854); 
North  Western  Ins.  Co.  v.  Phoenix, 
etc.,  Co.,  31  Pa.  St.  448  (1858); 
Brown  v.  Savannah,  etc.,  Ins.  Co., 
24  Ga.  101  (1858);  Portage,  etc.,  Ins. 
Co.  v.  West,  6  Ohio  St.  599  (1856); 
Amesbury  v.  Bowditch,  etc.,  Ins.  Co., 
6  Gray  (Mass.)  596  (1856);  Fullam 
v.  New  York  Ins.  Co.,  7  Gray 
(Mass.)  61  (1856);  Carter  v.  Hum- 
boldt  F.  Ins.  Co.,  12  Iowa  287 
(1861);  Stout  v.  City  F.  Ins.  Co.,  12 
Iowa  371  (1861);  Ripley  v.  ;Etna 
Ins.  Co.,  29  Barb.  (N.  Y.)  552 
(1859);  Gooden  v.  Amoskeag  F.  Ins. 
Co.,  20  N.  H.  73  (1849);  Brown  v. 
Roger  Williams  Ins.  Co.,  5  R.  I.  394 
(1858) ;  Ames  v.  New  York,  etc.,  Ins. 
Co.,  14  N.  Y.  253  (1856).  Contra, 
Eagle  Ins.  Co.  v.  Lafayette  Ins.  Co., 
9  Ind.  443  (1857);  French  v.  La- 
fayette Ins.  Co.,  5  McLean  (U.  S.) 
461  (1853);  Shawnee  F.  Ins.  Co.  v. 
Bayha,  8  Kan.  App.  169,  55  Pac.  474 
(1898). 

208  Omaha  F.  Ins.  Co.  v.  Drennan, 
56  Neb.  623,  77  N.  W.  67    (1898). 


§  330  THE  STANDARD  POLICY.  360 

The  provision  does  not  apply  to  an  action  to  enforce  a  compromise 
agreement  made  between  the  parties  after  the  property  is  destroyed.209 
The  failure  of  a  mortgagee  to  bring  an  action  within  the  time  lim- 
ited by  the  mortgage  clause  is  not  a  bar  to  an  action  brought  by  the 
mortgagor  within  the  time.210 

The  statute  of  limitations  in  contracts  of  insurance  will  not  be 
applied  with  the  same  degree  of  rigidity  as  ordinary  statutes  of  lim- 
itation, and  is  not  applicable  where  the  performance  of  the  condi- 
tions precedent  is,  without  fault  or  laches  on  the  part  of  the  in- 
sured, rendered  impossible  by  the  acts  of  the  insurer,  or  by  the  act 
of  God,  or  of  the  government,  or  of  the  courts.211 

The  rule  of  the  New  York  code,  that  an  attempt  to  commence  an 
action  is  equivalent  to  its  actual  commencement  so  far  as  the  statute 
of  limitations  is  concerned,  applies  to  limitations  created  by  contract 
as  well  as  those  imposed  by  statute.  This  provision  of  the  standard 
policy,  being  specifically  prescribed  by  law,  is  not  properly  a  con- 
tractual limitation.  "The  law  establishes  the  period  of  limitation, 
and  forbids  the  parties  from  disregarding  it.  The  law  as  effectually 
established  the  period  of  limitation  as  if  it  had  declared  in  express 
terms  that  the  limitation  of  time  for  the  commencement  of  an  action 
upon  a  fire  insurance  policy  should  be  the  period  of  one  year.  Prac- 
tically, then,  this  limitation  was  specially  prescribed  by  law,  and  hence 
falls  directly  within  the  principle  of  the  [earlier]  decisions  of  .this 
court."212 

This  provision  is  waived  by  a  representation  of  an  agent  that  the 
company  will  pay  without  suit.213  So,  where  the  conduct  of  the  in- 
sured is  such  as  to  mislead  the  insured  and  prevent  him  from  prose- 
cuting his  claim  within  the  time  limited  in  the  policy,  the  limitation 
is  waived.214 

§  330.  Time  when  limitation  begins  to  run. — This  form  of  policy 
provides  that  an  action  must  be  brought  within  twelve  months  next 
after  a  fire.  Formerly  it  was  customary  to  use  the  expression,  after 

209  Hanover  F.  Ins.  Co.  v.  Hatton,  den  v.  Pierce,  144  N.  Y.  512,  39  N.  E. 

21  Ky.  L.  1533,  55  S.  W.  681  (1900).  638  (1895);  Titus  v.  Poole,  145  N.  Y. 

""Shawnee  F.  Ins.  Co.  v.  Bayha,  414,  40  N.  E.  228   (1895). 

8  Kan.  App.  169,  55  Pac.  474  (1898).  213  Scottish  Union,  etc.,  Ins.  Co.  v. 

211  Jackson   v.    Fidelity,    etc.,    Co.,  Enslie,    78    Miss.  157,    28    So.    822 

75    Fed.    359,    41    U.    S.    App.    552  (1900). 

(1896).  ""De   Farconnet  v.   Western 'ins. 

312  Hamilton  v.  Royal  Ins.  Co.,  156  Co.,  110  Fed.  405    (1901). 
N.  Y.  327,  50  N.  E.  863  (1898);  Hay- 


361 


TIME    OF    BRINGING    SUIT. 


§    330 


a  loss  occurs.  There  are  two  directly  opposing  lines  of  authorities 
upon  the  question  whether,  under  such  a  policy,  the  year  of  limitation 
begins  to  run  from  the  time  of  the  fire,  or  from  the  time  when  the  loss 
is  ascertained  and  established  and  the  right  to  bring  an  action  exists.216 
As  said  by  the  supreme  court  of  Wisconsin,216  "doubtless  the  tendency 
of  so  many  courts  to  construe  'loss'  as  meaning  the  time  when  the 
liability  was  fixed  induced  many  insurance  companies  to  substitute 
the  word  'fire/  as  in  the  policy  before  us;  it  would  seem  as  if  the 
phrase,  'twelve  months  next  after  the  fire,'  was  susceptible  of  but  one 
meaning,  yet  the  courts  have  disagreed  upon  this  question  also. 
Some  of  the  decisions  are  to  the  effect  that  the  word  'fire'  is  to  be 
construed  as  meaning  not  the  date  of  the  fire,  but  the  time  when  the 
liability  is  fixed  and  an  action  accrues  to  the  insured.  But  the  better 
authorities  seem  to  hold  that  the  limitation  begins  to  run  from  the 
day  of  the  fire."217 

Under  the  Minnesota  form  of  policy,  which  provides  that  no  suit 
shall  be  sustained  unless  commenced  within  two  years  from  the  time 
the  loss  occurs,  it  is  held  that  the  limitation  begins  to  run  from  the 
time  of  the  fire  or  actual  destruction  of  the  property.218 


115  That  the  time  begins  to  run 
from  the  date  when  a  right  to  bring 
an  action  exists,  see  Steen  v.  Ni- 
agara F.  Ins.  Co.,  89  N.  Y.  315 
(1882);  Spare  v.  Home,  etc.,  Ins. 
Co.,  17  Fed.  568  (1883);  Chandler  v. 
St.  Paul,  etc.,  Ins.  Co.,  21  Minn.  85 
(1874);  Ellis  v.  Council  Bluffs  Ins. 
Co.,  64  Iowa  507  (1884);  Miller  v. 
Hartford  F.  Ins.  Co.,  70  Iowa  704 
(1886);  German  Ins.  Co.  v.  Fair- 
bank,  32  Neb.  750  (1891);  Barber 
v.  Fire  &  M.  Ins.  Co.,  16  W.  Va.  658 
(1880).  To  the  contrary,  see  Cham- 
bers v.  Atlas  Ins.  Co.,  51  Conn.  17 
(1883);  Johnson  v.  Humboldt  Ins. 
Co.,  91  111.  92  (1878);  Fullam  v. 
New  York,  etc.,  Ins.  Co.,  7  Gray 
(Mass.)  61  (1856);  Glass  v.  Walker, 
66  Mo.  32  (1877);  Bradley  v.  Phoe- 
nix Ins.  Co.,  28  Mo.  App.  7  (1887); 
Virginia,  etc.,  Ins.  Co.  v.  Wells,  83 
Va.  736  (1887);  Peoria  Sugar  Re- 
fining Co.  v.  Canada,  etc.,  Ins.  Co., 
12  Ont.  App.  418  (1885);  Blair  v. 
Sovereign  F.  Ins.  Co.,  19  N.  S. 


(7  Russell  &  G.)  372;  Travelers'  Ins. 
Co.  v.  California  Ins.  Co.,  1  N.  Dak. 
151  (1890);  Schroeder  v.  Keystone 
Ins.  Co.,  2  Phila.  (Pa.)  286  (1857). 
See  authorities  in  note  to  27  L.  R. 
A.  48. 

218  Hart  v.  Citizens'  Ins.  Co.,  86 
Wis.  77  (1893);  Friezen  v.  Allema- 
nia  F.  Ins.  Co.,  30  Fed.  352  (1887); 
Hong  Sling  v.  Insurance  Co.,  7  Utah 
441  (1891);  Case  v.  Sun  Ins.  Co.,  83 
Cal.  473  (1890). 

217  Hart  v.  Citizens'  Ins.  Co.,  86 
Wis.  77,  56  N.  W.  332,  Woodruff  Ins. 
Gas.  213  (1893);  Steel  v.  Phenix 
Ins.  Co.,  47  Fed.  863  (1891);  State 
Ins.  Co.  v.  Meesman,  2  Wash.  459 
(1891);  McElroy  v.  Continental  Ins. 
Co.,  48  Kan.  200  (1892);  Travelers' 
Ins.  Co.  v.  California  Ins.  'Co.,  1  N. 
Dak.  151  (1890);  King  v.  Water- 
town  F.  Ins.  Co.,  47  Hun  (N.  Y.)  1 
(1888). 

218Rottier  v.  German  Ins.  Co. 
(Minn.),  86  N.  W.  888  (1901). 


CHAPTEK  XIII. 

CERTAIN    GENERAL    PROVISIONS    OF    THE    STANDARD    POLICY. 

XXII.  Measure  of  Damages.  XXIV.  Subrogation. 

SEC.  SEC. 

332.  In  general.  339.  The  general  principle. 

333.  Valued  policy  legislation.  xxy   Reinsurance. 

334.  Constitutionality  of  valued  pol-     34Q    Tne  reinsurance  contract. 

icy  laws. 

335.  Meaning  of  total  loss.  XXVI.  Conditions    Affecting    Mort- 

336.  Total    loss    to    frame    building  gagees. 

within  fire  limits.  341-  Special  provisions. 

337.  Amount    of    recovery — Illustra-     XXVII.   Construction  of  Terms — Mu- 

tions.  tual  Companies. 

XXIII.  Prorating   Loss   with    Other     342-  In  general. 

Insurers.  XXVIII.  Indorsement  of  Other  Con- 

338.  The  pro  rata  clause.  ditions. 

XXII.     Measure  of  Damages. 

This  company  shall  not  be  liable  beyond  the  actual  cash  value  of 
the  property  at  the  time  any  loss  or  damage  occurs,  and  the  loss  or 
damage  shall  be  ascertained  or  estimated  according  to  such  actual 
cash  value,  with  proper  deduction  for  depreciation  however  caused, 
and  shall  in  no  event  exceed  what  it  would  then  cost  the  insured  to 
repair  or  replace  the  same  with  material  of  like  kind  and  quality;  said 
ascertainment  or  estimate  shall  be  made  by  the  insured  and  this  com- 
pany, or,  if  they  differ,  then  by  appraisers,  as  hereinafter  provided; 
and,  the  amount  of  loss  or  damage  having  been  thus  determined,  the 
sum  for  which  this  company  is  liable  pursuant  to  this  policy  shall  be 
payable  sixty  days  after  due  notice,  ascertainment,  estimate,  and  sat- 
isfactory proof  of  the  loss  have  been  received  by  this  company,  in 
accordance  ivith  the  terms  of  this  policy.1 

1  This  provision  is  found  in  the  Carolina.  Wisconsin  inserts,  "ex- 
standard  policies  of  New  York,  New  cept  when  otherwise  provided  by 
Jersey,  Connecticut,  Rhode  Island,  statute,"  in  referring  to  liability 
Michigan,  South  Dakota,  Iowa,  beyond  the  actual  cash  value  of  the 
North  Dakota,  Louisiana  and  North  property.  Massachusetts  and  Maine 

(362) 


363 


MEASURE    OF   DAMAGES. 


§    333 


§  332.  In  general. — This  method  of  providing  for  the  amount  of 
recovery  is  in  some  respects  in  conflict  with  the  valued  policy  laws  in 
force  in  many  states,  and  it  must  be  construed  in  connection  with 
such  statutes. 

§  333.  Valued  policy  legislation. — Where  the  policy  is  valued  and 
there  is  a  total  loss,  the  amount  of  recovery  is  determined  by  the  face 
of  the  policy.2  Whether  it  is  a  valued  one  must  be  determined  by 
the  language  of  the  contract  and  by  existing  statutes.  The  policy 
will  be  regarded  as  an  open  one,  unless  it  appears  to  be  the  intention 
of  the  parties  to  the  policy,  upon  a  fair  and  reasonable  construction 
of  its  terms,  to  value  the  loss  and  thereby  fix  by  contract  the  amount 
of  the  recovery.  The  question  must  be  determined  by  the  intention 
of  the  parties  gathered  from  the  whole  instrument.3  But  where  a 
statute  requires  all  policies  to  be  valued,  the  language  of  the  policy 
becomes  immaterial,4  and  the  amount  written  in  the  policy  must  be 


have  the  following  clause:  "This 
company  shall  not  be  liable  beyond 
the  actual  value  of  the  insured 
property  at  the  time  any  loss  or 
damage  occurs.  In  case  of  any  loss 
or  damage  the  company,  within  six- 
ty days  after  the  insured  shall  have 
submitted  a  statement,  as  provided 
in  the  preceding  clause,  shall  either 
pay  the  amount  for  which  it  shall  be 
liable,  which  amount  if  not  agreed 
upon  shall  be  ascertained  by  award 
of  referees  as  hereinafter  provided, 
or  replace  the  property  with  other  of 
the  same  kind  and  goodness  *  *  * 
and  that  the  company  shall  not  in 
any  case  be  liable  for  more  than 
the  sum  insured,  with  interest  there- 
on from  the  time  when  the  loss 
shall  become  payable,  as  above  pro- 
vided." The  Minnesota  clause  is 
similar  to  the  above  except  that  the 
first  paragraph,  relieving  the  com- 
pany from  liability  beyond  the  ac- 
tual value  of  the  insured  property 
at  the  time  any  loss  or  damage  hap- 
pens, is  omitted.  The  New  Hamp- 
shire clause  provides  that:  "This 
company  shall  not  be  liable  beyond 


the  actual  value  of  the  insured  prop- 
erty at  the  time  any  loss  or  damage 
happens,  except  on  buildings  totally 
destroyed,  in  which  case  the  full 
amount  of  the  limitation  shall  be 
paid  *  *  *  and  that  the  company 
shall  not  in  any  case  be  liable  for 
more  than  the  sum  insured,  with 
interest  thereon  from  the  time 
when  the  loss  shall  become  payable 
as  hereinafter  provided.  *  *  *  In 
case  of  any  loss  or  damage  the  com- 
pany, within  sixty  days  after  the 
insured  shall  have  submitted  a 
statement,  *  *  *  shall  either  pay 
the  amount  for  which  it  shall  be  lia- 
ble or  replace  the  property  with 
other  of  like  kind  and  goodness." 

2  Phoanix  Ins.  Co.  v.  McLoon,  100 
Mass.  475   (1868). 

3  Insurance  Co.  v.  Butler,  38  Ohio 
St.     128,    Woodruff    Ins.     Gas.     207 
(1882). 

4Oshkosh  Gas-Light  Co.  v.  Ger- 
mania  F.  Ins.  Co.,  71  Wis.  454, 
Woodruff  Ins.  Gas.  209  (1888);  Mil- 
waukee, etc.,  Ins.  Co.  v.  Russell 
(Ohio),  62  N.  E.  338  (1901),  and 
cases  cited. 


§    333  THE    STANDARD    POLICY.  364 

taken  conclusively  to  be  the  true  value  of  the  property,  and  the 
amount  of  the  recovery>  where  there  is  a  total  loss.5  Thus,  a  fire  in- 
surance company  is  liable,  in  case  of  a  total  loss,  for  the  full  amount 
of  the  policy,  notwithstanding  the  provision  in  the  policy  by  which 
it  agrees  to  pay  only  three-fourths  of  the  value  in  case  of  loss,  where 
a  statute  provides  that  such  company  shall  be  liable  for  the  full  es- 
timated value  of  the  property  insured,  as  the  same  is  fixed  on  the 
face  of  the  policy.6 

Valued  policy  laws  are  now  in  force  in  twenty-one  states,  having 
been  adopted  by  Wisconsin  in  1874,  Ohio  and  Texas  in  1879,  New 
Hampshire  in  1885,  Arkansas,  Delaware  and  Nebraska  in  1889, 
Oklahoma  in  1890,  Mississippi  in  1892,  Kansas,  Kentucky  and  Oregon 
in  1893,  Minnesota  in  1895,  South  Carolina  in  1896,  Florida,  Iowa 
and  Washington  in  1897,  West  Virginia  in  1899,  and  California  in 
1901.  These  statutes  vary  in  phraseology,  but  that  of  Wisconsin, 
which  was  the  first  enacted,  may  be  used  as  an  illustration.  It  pro- 
vides that  "whenever  any  policy  of  insurance  shall  be  written  to  in- 
sure any  real  property,  and  if  the  property  insured  shall  be  wholly 
destroyed  without  criminal  fault  on  the  part  of  the  insured  or  his 
assigns,  the  amount  of  insurance  written  in  such  policy  shall  be  taken 
conclusively  to  be  the  true  value  of  the  property  when  insured,  and 
the  true  amount  of  loss  and  the  measure  of  damages  when  destroyed." 

This  provision  of  the  standard  policy  must  be  construed  in  con- 
nection with  the  valued  policy  law,  which,  in  the  event  of  a  total  loss, 
determines  conclusively  that  the  amount  named  in  the  policy  is  the 
"actual  cash  value  of  the  property."7 

Overvaluation  under  a  valued  policy,  unless  fraudulent,  does  not 
affect  the  right  to  recover.  The  valued  policy  laws  do  not  as  a  rule 
apply  to  personal  property.8 

5  Temple  v.   Niagara  F.   Ins.   Co.,  3    L.    R.    A.    523    (1889);    Oshkosh 
109  Wis.  372,  85  N.  W.  361   (1901).  Gas-Light  Co.  v.  Germania  P.   Ins. 

6  Caledonian  Ins.  Co.  v.  Cooke,  101  Co.,    71    Wis.    454,    37    N.    W.    819 
Ky.  412,  41  S.  W.  279   (1897);   Phce-  (1888). 

nix  Ins.  Co.  v.  Peak,  20  Ky.  L.  1035,  8  Cushman    v.    Northwestern    Ins. 

47  S.  W.  1089   (1898).  Co.,  34  Me.  487    (1852);    Havens  v. 

7  Temple  v.   Niagara  F.   Ins.   Co.,  Germania  F.  Ins.  Co.,  123  Mo.  403, 
109  Wis.  372,  85  N.  W.  361   (1901);  27  S.  W.  718,  26  L.  R.  A.  107  (1894); 
Reilly  v.  Franklin  Ins.  Co.,  43  Wis.  German  Ins.  Co.  v.  Jansen,  18  Tex. 
449   (1877);  Thompson  v.  Insurance  Civ.  App.  190,  45  S.  W.  220  (1898); 
Co.,   45   Wis.    388    (1878);    Seyk   v.  Vergeront   v.   German   Ins.    Co.,   86 
Millers',   etc.,   Ins.   Co.,   74  Wis.   67,  Wis.  425   (1893). 


365  MEASURE    OF   DAMAGES.  §    334 

§  334.  Constitutionality  of  valued  policy  laws. — The  insurance 
companies  have  strenuously  opposed  such  legislation,  and  in  several 
states  vigorous  executive  vetoes  have  been  interposed  to  acts  passed 
by  the  legislatures.  Such  questions  have  now  been  settled  by  a  de- 
cision of  the  supreme  court  of  the  United  States.  In  affirming  the 
constitutionality  of  such  a  statute,  Mr.  Justice  McKenna  said  :9  "The 
specific  objections  which,  it  is  claimed,  bring  the  statute  within  the 
prohibition  of  the  constitution  in  the  last  analysis  may  be  reduced 
to  the  following:  That  the  statute  takes  away  a  fundamental  right 
and  precludes  a  judicial  inquiry  of  liability  on  policies  of  fire  insur- 
ance by  a  conclusive  presumption  of  fact. 

"The  right  claimed  is  to  make  contracts  of  insurance.  The  essence 
of  these,  it  is  said,  is  indemnity,  and  that  the  statute  converts  them 
into  wager  policies — into  contracts  (to  quote  counsel)  having  for 
their  bases  speculation  and  profit,  'contrary  to  the  course  of  the  com- 
mon law.'  The  statement  is  broad,  and  counsel,  in  making  it,  ig- 
nores many  things.  The  statute  tends  to  assure,  not  to  detract  from, 
the  indemnity  of  the  contracts,  and  if  elements  of  chance  or  specula- 
tion intrude  it  will  be  on  account  of  carelessness  or  fraud.  It  is  ad- 
mitted that  the  effect  of  the  statute  is  to  make  valued  policies  of  those 
issued;  and  the  'conclusive  effect  which  has  been  ascribed  to  their 
valuation  has  never  been  condemned  as  making  them  wager  policies 
or  as  introducing  elements  of  speculation  into  them. 

"The  statute,  then,  does  not  present  the  alternative  of  wager  pol- 
icies to  indemnity  policies.  The  change  is  from  one  kind  of  indem- 
nity policy  to  another  kind,  from  open  policies  to  valued  policies, 
both  of  which  are  sanctioned  by  the  practice  and  law  of  insurance,  and 
this  change  is  the  only  compulsion  of  the  law.  It  makes  no  con- 
tract for  the  parties.  In  this  it  permits  absolute  freedom.  It  leaves 
them  to  fix  the  valuation  of  the  property  upon  such  prudence  and 
inquiry  as  they  choose.  It  only  ascribes  estoppel  after  this  is  done — 
estoppel,  it  must  be  observed,  to  the  acts  of  the  parties,  and  only  to 
their  acts  in  open  and  honest  dealing.  Its  presumptions  can  not  be 
urged  against  fraud,  and  it  permits  the  subsequent  depreciation  of 
the  property  to  be  shown. 

"We  see  no  risk  to  insurance  companies  in  this  statute.  How  can 
it  come  ?  Not  from  fraud  and  not  from  change,  because,  as  we  have 

•Orient  Ins.  Co.  v.  Daggs,  172  U.  S.  557  (1899),  affirming  136  Mo.  382 

(1896). 


§    335  THE    STAXDARD   POLICY.  36G 

seen,  the  presumptions  of  the  statute  do  not  obtain  against  fraud  or 
change  in  the  valuation1  of  the  property.  Kisk,  then,  can  only  come 
from  the  failure  to  observe  care — the  care  which  it  might  be  sup- 
posed, without  any  prompting  from  the  law,  underwriters  would 
observe,  and  which,  if  observed,  would  make  their  policies  true  con- 
tracts of  assurance,  not  seemingly  so,  but  really  so;  not  only  when 
premiums  are  paying,  but  when  the  loss  is  to  be  paid.  The  state 
surely  has  the  power  to  determine  that  this  result  is  desirable,  and 
to  accomplish  it  even  by  a  limitation  of  the  right  of  contract  claimed 
by  the  plaintiff  in  error. 

"It  would  be  idle  and  trite  to  say  that  no  right  is  absolute.  Sic 
utere  tuo  ut  alienum  non  loedas  is  of  universal  and  pervading  obliga- 
tion. It  is  a  condition  upon  which  all  property  is  held.  Its  applica- 
tion to  particular  conditions  must  necessarily  be  within  the  reason- 
able discretion  of  the  legislative  power.  When  such  discretion  is 
exercised  in  a  given  case  by  means  appropriate,  and  which  are  reason- 
able, not  oppressive  or  discriminatory,  it  is  not  subject  to  constitu- 
tional objection." 

§  335.  Meaning  of  total  loss. — Under  a  valued  policy,  the  amount 
named  therein  is  recoverable  when  there  is  a  total  loss.  A  building- 
is  totally  destroyed  within  the  meaning  of  such  policy  when  it  no 
longer  exists  as  a  building,  although  some  of  the  material  may  have 
value  as  material.  The  New  York  court  of  appeals  recently  said:10 
"A  total  destruction  within  the  meaning  of  the  policy  must  mean  the 
complete  destruction  of  the  insured  property  by  fire  so  that  nothing 

10  Corbett   v.    Spring   Garden    Ins.  character  as  a  building,  the  insur- 

Co.,   155   N.   Y.   389,   50   N.   E.    282  ance  not  being  upon  the  material 

(1898).     See,    also,    Hamburg,    etc.,  composing  the  building  but  upon  the 

Ins.  Co.  v.  Garlington,  66  Tex.  103,  building  as  such.    When  the  loss  by 

18  S.  W.  337  (1886);  Oshkosh  Pack-  fire  is  such  that  its  character  as  a 

ing,  etc.,  Co.  v.  Mercantile  Ins.  Co.,  building  is  destroyed,  and  it  remains 

31  Fed.  200   (1887).     In  Pennsylva-  simply  as  a  mass  of  ruins,  parts  of 

nia  F.  Ins.  Co.  v.  Drackett,  63  Ohio  which  may  remain  standing,  but  of 

St.  41,  57  N.  E.  962  (1900),  the  court  no  value  in  repairing  or  rebuilding 

said :     "It  seems  to  be  agreed  that  it  the     structure,     though     something 

is  not  necessary  to  constitute  a  total  might  be  realized  from  the  material 

loss  that  all  the  material  composing  by  removing  it,  the  loss  is  regarded 

the   building   should    be   destroyed,  as   total."      See,    also,    Williams   v. 

It  is  sufficient,  though  some  parts  of  Hartford     Ins.     Co.,     54     Cal.     442 

it  remain  standing,  if  the  building  (1880). 
has   lost    its    identity    and    specific 


367  MEASURE    OF   DAMAGES.  §    335 

of  value  remains  of  it,  as  distinguished  from  a  partial  loss,  where 
the  property  is  damaged  but  not  entirely  destroyed.  This  does  not 
mean  that  the  materials  of  which  the  building  was  composed  were 
all  utterly  destroyed  or  obliterated,  but  that  the  building,  though 
some  part  of  it  may  be  left  standing,  has  lost  its  character  as  a  build- 
ing, and  instead  thereof  has  become  a  broken  mass,  or  so  far  in  that 
condition  that  it  can  not  properly  any  longer  be  designated  as  a 
building.  When  that  has  occurred,  then  there  is  total  destruction  or 
loss.  A  total  loss  does  not  mean  absolute  extinction ;  it  does  not  mean 
that  all  the  parts  composing  the  building  are  absolutely  and  physically 
destroyed,  but  the  inquiry  always  is  whether  after  a  fire,  the  thing 
insured  still  exists  as  a  building." 

A  building  is  a  total  loss  where  the  remnant  is  inconsiderable  com- 
pared with  the  part  entirely  destroyed,  and  does  not  constitute  a 
sufficient  basis  to  restore  the  burnt  building.11  Thus,  a  building  is 
a  total  loss  where  three  of  the  walls  are  entirely  destroyed,  and  none 
of  the  joists,  floor  and  window  sills  are  left,  although  the  other  wall 
was  used  in  erecting  a  new  building  after  being  condemned  as  unfit 
for  use.12  The  foundation  of  the  building  is  not  within  the  con- 
templation of  the  parties,  and  hence  the  question  of  injury  to  the 
foundation  should  not  be  considered  in  reaching  a  conclusion  as  to  a 
total  loss.13 

There  is  a  total  loss,  although  the  building-  was  not  sound  when 
it  was  insured,  where  it  is  so  injured  by  fire  as  to  l«e  rendered  inse- 
cure and  a  menace  to  life,  and  for  that  reason  is  condemned  by 
the  proper  authorities.14 

Under  the  Minnesota  standard  policy,  total  loss  is  to  be  ascer- 
tained as  of  the  date  of  its  occurrence,  and  is  determined  by  the  fol- 
lowing tests: 

A  building  is  not  a  total  loss  unless  it  has  been  so  far  destroyed  by 
the  fire  that  no  substantial  part  of  it  above  the  foundation  remains 
in  place  capable  of  being  safely  utilized  in  restoring  the  building  to 
the  condition  in  which  it  was  before  the  fire. 

"Murphy    v.    American    Ins.    Co.  Ins.  Co.,  74  Wis.  67,  3  L.  R.  A.  523, 

(Tex.    Civ.    App.),    54    S.    W.    407  41  N.  W.  443  (1889). 

(1899).  13  Murphy  v.   American,  etc.,   Ins. 

"American,  etc.,  Ins.  Co.  v.  Mur-  Co.   (Tex.  Civ.  App.),  54  S.  W.  407 

phy   (Tex.  Civ.  App.),  61  S.  W.  956  (1899). 

(1901).     See,  also,   German  F.   Ins.  "  Monteleone  v.  Royal  Ins.  Co.,  47 

Co.  v.  Eddy,  36  Neb.  461,  19  L.  R.  A.  La.  Ann.  1563,  18  So.  472  (1895). 
707    (1893);    Seyk   v.   Millers',   etc., 


§    336  THE    STANDARD   POLICY.  368 

The  words  "total  loss,"  when  applied  to  a  building,  mean  totally 
destroyed  as  a  building — that  is,  that  the  walls,  although  some  por- 
tion of  them  remain  standing,  are  unsafe  to  use  for  the  purpose  of  re- 
building and  would  have  to  be  torn  down  and  a  new  building  erected 
throughout. 

There  can  be  no  total  loss  of  a  building  so  long  as  the  remnant  of 
the  structure  left  standing  above  the  foundation  is  reasonably  and 
safely  adapted  for  use  (without  being  taken  down)  as  a  basis  upon 
which  to  restore  the  building  to  the  condition  in  which  it  was  imme- 
diately before  the  fire ;  and  whether  it  is  so  adapted  depends  upon  the 
question  whether  a  reasonably  prudent  owner  of  a  building  unin- 
sured, desiring  such  a  structure  as  the  one  in  question  was  before  the 
fire,  would,  in  proceeding  to  restore  the  building,  utilize  such  stand- 
ing remnant  as  such  basis.  If  he  would,  then  the  loss  is  not  total. 

A  cold  storage  plant  was  insured  under  the  following  description: 
"Four-story  and  basement  brick  building,  with  composition  roof,  and 
a  brick  engine  and  boiler  house  attached,  including  steam  heating 
and  hoisting  apparatus,  steam,  brine,  water  and  gas  pipe  fixtures,  and 
all  other  permanent  fixtures,  occupied  for  warehouse  purposes."  The 
engine  house  consisted  of  a  small  one-story  brick  structure  at- 
tached to  the  main  building,  and  the  whole  was  considered  and  oper- 
ated as  an  entirety.  It  was  held  that,  conceding  the  engine  house  was 
but  slightly  damaged  by  the  fire,  the  question  of  total  loss  must  be  ap- 
plied to  the  structure  as  a  whole.15 

§  336.  Total  loss  to  frame  building  within  fire  limits. — Where  a 
policy  covers  a  building  located  within  the  fire  limits  of  a  city,  of  a 
class  which,  under  certain  conditions,  can  not  be  repaired  without 
violating  the  city  ordinances,  there  is  a  total  loss  when  the  repairing 
of  the  building  insured  and  damaged  is  prevented  by  reason  of  such 
ordinances.  But  the  value  of  what  remains  of  the  building  after  a 
fire,  over  and  above  the  cost  of  removing  it  from  the  premises,  should 
be  deducted  from  the  face  of  the  policy.  "There  is  no  question  in 
this  case,"  said  the  court,16  "but  that  the  insured  building  was  within 

15  Northwestern,  etc.,  L.  Ins.  Co.  v.  (1886);  Brady  v.  Northwestern  Ins. 

Rochester,  etc.,  Ins.  Co.  (Minn.),  88  Co.,  11  Mich.  425  (1863);  Fire  Ass'n 

N.  W.  265  (1901).  v.  Rosenthal,  108  Pa.  St  474,  1  Atl. 

"Larkin  v.  Glens  Falls  Ins.  Co.,  303  (1885);  Monteleone  v.  Royal  Ins. 

80  Minn.  527,  83  N.  W.  409   (1900);  Co.,   47   La.   Ann.   1563,   18    So.   472 

Hamburg,  etc.,  Ins.  Co.  v.  Garling-  (1895). 
ton,    66    Tex.    103,    18    S.    W.    337 


369  MEASURE    OF   DAMAGES.  §    337 

such  fire  limits,  and  no  question  but  that  the  building  inspector  re- 
fused a  permit  to  repair  the  same  after  the  fire.  Nor  is  there  any 
question  but  that,  without  proper  and  suitable  repairs,  the  building 
was  rendered  practically  worthless  by  the  fire.  So  we  are  confronted 
with  the  question  as  to  the  effect  of  such  ordinances  and  the  action 
of  the  inspector  thereunder,  on  the  contract  of  insurance.  The  ques- 
tion is  a  new  one  in  this  state,  and  an  examination  of  the  books  dis- 
closes very  few  adjudged  cases  on  the  subject  in  other  states.  *  *  * 
These  authorities  lay  down  the  rule  that  such  ordinances  are  a  part 
of  the  contract  of  insurance,  and  that  the  insurer  is  bound  thereby. 
This  is  in  line  with  the  general  doctrine  that,  where  the  parties  con- 
tract upon  a  subject  which  is  surrounded  by  statutory  limitations  and 
requirements,  they  are  presumed  to  have  entered  into  their  engage- 
ments with  reference  to  such  statute,  and  the  same  enters  into  and 
becomes  a  part  of  the  contract."  After  quoting  the  statement  of 
Mr.  Joyce  that  under  such  circumstances  a  recovery  may  be  had  for 
a  total  loss,  the  court  said :  "To  this  may  be  added  the  qualification 
that,  if  what  remains  of  the  building  after  the  fire  be  of  any  value 
over  and  above  the  cost  and  expense  of  removing  it,  such  excess  value 
must  be  deducted  from  the  recovery."  The  court  declined  to  pass 
upon  the  question  whether  the  determination  of  the  building  in- 
spector, or  of  the  board  of  arbitration,  on  appeal  from  his  decision, 
that  the  building  had  been  damaged  to  the  extent  of  fifty  per  cent, 
of  its  value,  and  therefore  was  not  subject  to  repaft  under  the  or- 
dinance, was  final  and  conclusive. 

§  337.  Amount  of  recovery — Illustrations. — There  are  numerous 
cases  which  construe  provisions  similar  to  that  of  the  standard  policy. 
The  purpose  of  the  clause  providing  that  "the  company  shall  not  be 
liable  beyond  the  actual  cash  value  of  the  property  at  the  time  the 
loss  or  damage  occurs"  is  to  prevent  a  recovery  of  damages  beyond 
the  prescribed  limitation.  It  does  not  affect  the  right  of  the  plaintiff 
to  prove  and  recover  damages  in  an  amount  less  than  the  actual  cash 
value  of  the  property  destroyed  or  injured.  The  value  at  the  date  of 
the  loss  is  the  limit  of  recovery,  but  it  is  not  a  constituent  element 
of  a  cause  of  action  on  the  policy,  and  need  not  be  stated  in  the 
complaint.17  Where  the  policy  provided  that  the  company  should  not 

"Osborne  v.  Phenix  Ins.  Co.  (Utah),  64  Pac.  1103  (1901). 
24 — ELLIOTT  INS. 


§    338  THE   STANDAED   POLICY.  370 

be  liable  beyond  the  actual  cash  value  of  the  property  at  the  time  of 
the  loss  or  damage,  which  should  be  ascertained  according  to  such 
actual  cash  value,  with  proper  deduction  for  depreciation,  however 
caused,  but  in  no  event  to  exceed  what  it  would  cost  the  insured  to 
repair  or  replace  the  same  with  material  of  like  kind  and  quality, 
it  was  held  that  the  measure  of  damages  was  the  sum  it  would  cost 
the  insured  to  repair  or  replace  the  building  with  one  of  like  kind  and 
quality.18  The  insurance  company  is  not  bound  by  the  value  placed 
on  the  property  in  the  application.19  A  company  which,  upon  an  ap- 
plication for  additional  insurance,  increases  the  amount  of  the  risk, 
can  not,  after  a  loss,  restrict  its  liability  to  three-fifths  of  the  addi- 
tional insurance  because  a  stipulation  in  the  original  policy  provides 
that  it  shall  cover  but  a  three-fifths'  interest  in  the  property  desig- 
nated.20 The  amount  of  the  government  tax  on  whisky  destroyed 
by  fire  in  a  bonded  warehouse  can  not  be  deducted  from  the  amount 
of  the  loss  in  an  action  by  the  owner,  upon  a  policy  of  insurance 
against  all  direct  loss  or  damage  by  fire  to  the  whisky.21  Where  a 
part  of  the  property  was  removed  to  other  premises  and  was  there 
destroyed  by  fire,  and  the  loss  amounts  to  the  face  of  the  policy,  the 
company  is  not  entitled  to  reduce  the  loss  in  the  proportion  that  the 
value  of  the  property  remaining  bears  to  that  destroyed,  but  must 
indemnify  the  insured  for  the  whole  loss.22 

XXIII.     Prorating  Loss  with  Other  Insurers. 

This  company  shall  not  be  liable  under  this  policy  for  a  greater 
proportion  of  any  loss  on  the  described  property,  or  for  loss  by  and  ex- 
pense of  removal  from  premises  endangered  by  fire,  than  the  amount 

18  McCready   v.    Hartford    F.    Ins.  struction  of  the  building  caused  by 

Co.,  70  N.  Y.  Supp.  778,  61  App.  Div.  the  legislation  does  not  increase  its 

(N.  Y.)   583    (1901).     In  computing  market   value:     Pennsylvania,    etc., 

the   loss   sustained   by   the   insured  Co.   v.   Philadelphia,   etc.,   Co.    (Pa. 

and  chargeable  to  the  insurer  under  Com.    PL),    10    Pa.    Dist.    R.    181 

a  fire  policy,  the  cost  of  rebuilding  (1900). 

up  to  the  amount  to  be  designated  in  "  Brown  v.  Quincy,  etc.,  Ins.  Co., 

the  policy  is  to  be  included,  though  105  Mass.  396  (1870). 

increased  beyond  the  original  cost  20  London   Assur.   Corp.   v.   Pater- 

of  construction  by  reason  of  an  act  son,  106  Ga.  538,  32  S.  E.  650  (1899). 

of  the  assembly  regulating  the  con-  "  Queen  Ins.  Co.  v.  McCoin,  20  Ky. 

struction  of  buildings,  passed  before  L.  1633,  49  S.  W.  800  (1899). 

the   fire,   but  after  the   policy   was  22  Westchester  P.   Ins.  Co.  v.   Mc- 

issued,    where    the    improved    con-  Adoo  (Tenn.),  57  S.  W.  409   (1899). 


371  PRORATING    LOSS.  §    338 

hereby  insured  shall  bear  to  the  whole  insurance,  whether  valid  or  not, 
or  by  solvent  or  insolvent  insurers,  covering  such  property,  and  the 
extent  of  the  application  of  the  insurance  under  this  policy  or  of  the 
contribution  to  be  made  by  this  company  in  case  of  loss}  may  be  pro- 
vided for  by  agreement  or  condition  written  hereon  or  attached  or 
appended  hereto.23 

§  338.  The  pro  rata  clause. — In  the  absence  of  a  clause  of  this 
character,  the  insured  may  recover  either  a  proportionate  part  of  the 
loss  from  each  insurer  or  the  entire  amount  from  one  insurer.2*  An 
insurer  who  pays  the  entire  amount  is  entitled  to  contribution  from 
the  other  insurers.  As  said  by  Lord  Mansfield  in  an  early  case:25 
"As  between  the  insurer  and  the  insured,  upon  the  foot  of  commuta- 
tive justice  merely,  there  is  no  colour  why  the  insurers  should  not  pay 
the  insured  the  whole.  For  they  have  received  a  premium  for  the 
whole  risque.  *  *  *  If  the  insured  is  to  receive  but  one  satis- 
faction, natural  justice  says  that  the  several  insurers  should  all  of 
them  contribute  pro  rata  to  satisfy  that  loss  against  which  they  have 
all  insured,  *  *  *  and  if  the  whole  should  be  recovered  from 
one,  he  ought  to  stand  in  the  place  of  the  insured  to  receive  contribu- 
tion from  the  other,  who  was  equally  liable  to  pay  the  whole." 

This  provision  of  the  standard  policy  is  new  in  form  and  arrange- 
ment. It  relates  to  double  or  other  insurance,  and  not  to  insurance 
upon  different  interests.26  The  object  of  the  clause  is  to  prevent  a 
multiplicity  of  actions.  Under  it  there  is  no  right  of  contribution 
between  companies,  as  the  insured  can  recover  from  each  only  its 

23  This  provision  is  found  in  the  it  shall  not  apply  in  case  of  total 

standard  policies  of  New  York,  New  loss  on  buildings. 

Jersey,   Connecticut,   Rhode   Island,  21  See    Norwich,    etc.,    Ins.    Co.   v. 

Louisiana,  Wisconsin,  North  Dakota,  Wellhouse     (Ga.),     39     S.     E.     397 

South  Dakota,  Michigan  and  North  (1901). 

Carolina.     Massachusetts,  Maine  and  *  Godin  v.  London  Assur.  Co.,  1 

New  Hampshire  have  the  following  Burr.  489  (1758). 

clause:     "If  there  shall  be  any  other  *  See  §  245,  supra;  Fire  Ins.  Ass'n 

insurance  on  the  property  insured,  v.  Merchants',  etc.,  Transp.  Co.,  66 

whether  prior  or  subsequent,  the  in-  Md.  339   (1886),  7  Atl.  905;   McMas- 

sured   shall  recover  on  this  policy  ter  v.  Insurance  Co.,  55  N.  Y.  222, 

no   greater   proportion   of   the   loss  14  Am.  Rep.  239   (1873).     See  note 

sustained  than  the  sum  hereby  in-  to  15  L.  R.  A.  127,  for  cases  as  to 

sured  bears  to  the  whole  amount  in-  what   constitutes   double   insurance 

sured     thereon."       The     Minnesota  for  the   purpose   of   the   apportion- 

clause  is  similar,  but  provides  that  ment  of  the  loss. 


§    339  THE    STANDARD   POLICY.  372 

full  pro  rata  share.  Where  there  are  several  policies  which  cover  in 
part  the  same  and  in  part  different  property,  and  contain  different 
and  inconsistent  provisions,  it  is  practically  impossible  to  prorate 
the  loss  by  this  or  by  any  other  rule.  Mr.  Eichards,  after  referring 
to  the  fact  that  these  matters  are  generally  settled  by  the  companies 
out  of  court,  says  that  the  courts  have  endeavored  to  apply  the  fol- 
lowing principles: 

1.  The  different  policies  are  placed  as  far  as  possible  upon  an 
equality,  and  special  conditions  and  limitations  in  one  policy  are  not 
brought  over  into  another  policy. 

2.  The  object  of  the  contribution  clause  is  construed  to  be  a  re- 
striction of  the  amount  recovered  from  each  insurer  to  its  equitable 
contributory  share,  and  must  not  be  permitted  to  operate  so  as  to 
reduce  the  aggregate  amount  of  indemnity  which  the  insured  might 
otherwise  recover.     No   arrangement   of   the   clauses   in   the   policy 
should  be  used  to  the  disadvantage  of  the  insured.     He  must  be  paid, 
and  the  dispute,  if  any,  settled  among  the  underwriters.27 

Liability  is  reduced  pro  rata  by  insurance,  whether  valid  or  not, 
"or  by  solvent  or  insolvent  insurers."28 

The  provision  with  reference  to  valid  or  invalid  insurance  refers 
only  to  other  insurance  obtained  with  the  consent  of  the  company, 
and  has  no  application  to  other  policies.29  Where  there  is  double 
insurance,  and  the  total  loss  exceeds  the  total  insurance,  there  can  be 
no  apportionment,  and  each  insurer  must  pay  in  full  the  amount  for 
which  he  is  individually  liable.30 

XXIV.     Subrogation. 

If  this  company  shall  claim  that  the  fire  was  caused  by  the  act  or 
neglect  of  any  person  or  corporation,  private  or  municipal,  this  com- 
pany shall,  on  payment  of  the  loss,  be  surrogated  to  the  extent  of 
such  payment  to  all  the  right  of  recovery  by  the  insured  for  the  loss 
resulting  therefrom,  and  such  right  shall  be  assigned  to  this  com- 
pany by  the  insured  on  receiving  such  payment.31 

27  Richards  Ins.,  §  164,  citing  Lu-  M  London,  etc.,   Ins.   Co.   v.   Turn- 
cas  v.  Jefferson   Ins.  Co.,   6  Cowen  bull,  86  Ky.  230,  5  S.  W.  542  (1887). 
(N.  Y.)  635,  Woodruff  Ins.  Gas.  198  30  Lebanon,  etc.,  Ins.  Co.  v.  Kepler, 
(1827).     This  case   contains  a  gen-  106  Pa.  St.  28  (1884). 

eral   discussion  of  the  rules  which  31  This  provision  is  found  in  the 

govern  prorating  and  contribution,  standard  policies  of  New  York/ New 

28  Cassity    v.     New    Orleans    Ins.  Jersey,   Rhode   Island,   Connecticut, 
Ass'n,  65  Miss.  49  (1887).  Michigan,      Louisiana,      Wisconsin, 


373  SUBROGATION.  §    339 

§  339.  The  general  principle. — The  common-law  right  of  subro- 
gation has  been  referred  to  elsewhere.  The  insurer  is  treated  as  a 
surety,  and  is  entitled  to  all  the  remedies  of  the  insured  against  a  per- 
son who  by  his  wrongdoing  causes  the  destruction  of  the  insured 
property.  "It  is  well  settled  that,  if  a  loss  under  a  policy  of  insur- 
ance is  occasioned  by  the  wrongful  act  of  a  third  party,  the  insurer 
occupies  the  position  of  a  mere  surety,  and  the  wrongdoer  that  of 
a  principal  debtor;  and  all  the  incidents  of  suretyship  attach  to 
the  position  of  the  underwriter  in  such  cases,  including  the  right  of 
subrogation.  *  *  *  The  same  principle  is  applicable  to  the  con- 
tract of  insurance  if  the  surety  [assured]  destroys  the  remedy  of 
subrogation,  and  relieves  the  assurer  to  the  full  extent  to  which  the 
wrongdoer  could  have  been  made  liable  for  the  loss."32 

The  right  of  subrogation  is  expressly  declared  by  the  standard 
policy,  which  also  provides  for  a  formal  assignment  to  the  company  of 
the  insured's  right  of  action  against  the  wrongdoer. 

If  the  insured  destroys  the  insurer's  right  of  subrogation  to  a 
claim  against  the  person  causing  the  loss,  he  can  not  recover  against 
the  insurance  company.  Thus,  where  the  insured  consented  to  exclude 
a  claim  for  certain  fixtures  covered  by  the  policy  from  the  considera- 
tion of  the  jury,  in  an  action  against  the  wrongdoer  to  recover  dam- 
ages to  other  larger  interests  than  the  fixtures,  it  was  held  that  he 
thereby  lost  his  right  of  action  against  the  insurer  on  account  of 
the  fixtures  under  a  policy  which  provided  that  upon  payment  of  the 
loss  the  assured  should  assign  his  claim  against  the  wrongdoer  to 
the  insurer,  or  prosecute  it  at  the  request  and  expense,  and  for  the 

South  Dakota,  North  Dakota,  Iowa        32  Dilling  v.  Draemel,  9  N.  Y.  Supp. 

and  North  Carolina.     The  standard  497    (1890);    quoted  in  Packham  v. 

policies    of    Massachusetts,    Minne-  German  F.  Ins.  Co.,  91  Md.  515,  50 

sota,    Maine    and    New    Hampshire  L.  R.  A.  828  (1900).    See,  also,  Chi- 

contain  the  following  clause:    "And  cago,  etc.,  R.  Co.  v.  Glenny,  175  111. 

whenever    the    company    shall    pay  238,   51   N.  B.   896    (1898);    Phoenix 

any  loss  the  assured  shall  assign  to  Ins.   Co.   v.  Erie,  etc.,  Transp.  Co., 

it,  to  the  extent  of  the  amount  so  117  U.  S.  312  (1886),  118  U.  S.  210 

paid  all  rights  to  recover  satisfac-  (1886).     In     Leavitt    v.     Canadian, 

tion  for  the  loss  or  damage  from  etc.,  R.  Co.,  90  Me.  153,  37  Atl.  886, 

any  person,  town,  or  other  corpora-  38  L.  R.  A.  152  (1897),  it  was  held 

tion,   excepting   other   insurers;    or  that  the  right  of  recovery  against  a 

the  insured,  if  requested,  shall  pros-  person  causing  a  loss,  which  is  thus 

ecute  therefor  at  the  charge  and  for  reserved,  depends  upon  the  law  ex- 

the  account  of  the  company."  isting  at  the  time  of  the  fire. 


§    339  THE    STANDARD   POLICY.  374 

benefit  of  such  insurer.  In  this  case  the  court  said:33  "It  remains 
for  us  to  determine  whether  the  proceedings  resulting  in  the  judg- 
ment against  the  gas  company  released  the  wrongdoer  and  destroyed 
the  defendant's  right  of  subrogation.  Now,  there  was  in  this  case 
but  one  tortious  and  negligent  act  of  the  gas  company,  resulting  in 
one  fire,  which  occurred  at  one  and  the  same  time,  as  well  the  loss 
incurred  under  this  policy  as  the  loss  incurred  under  the  other  policies 
for  which  recovery  was  had  against  the  gas  company.  This  is  admit- 
ted by  the  demurrer,  as  well  as  the  further  facts  that  that  suit  was 
for  the  whole  loss  occasioned  by  the  fire;  that  there  was  no  reserva- 
tion of  any  right  by  the  plaintiff  for  the  protection  of  this  defendant, 
and  no  agreement  qualifying  the  effect  of  the  verdict ;  and  that  by  the 
direction  of  the  plaintiff  the  recovery  did  not  include  any  compensa- 
tion for  loss  incurred  under  this  policy ;  and  the  defendant  has  no  in- 
terest in  the  recovery  as  to  the  policy  with  which  we  are  now  con- 
cerned. For  a  single  indivisible  tort  but  one  suit  can  be  brought. 
The  plaintiff  in  this  case  could  not  now  bring  another  suit  against 
the  gas  company  for  his  own  benefit  to  recover  the  loss  incurred  un- 
der this  policy,  nor  could  such  suit  be  brought  in  his  name  for  the 
benefit  of  the  defendant.  *  *  *  The  plaintiff  had  one  indivisible 
cause  of  action  against  the  gas  company,  and  that  cause  of  action  has 
been  merged  in  the  judgment  he  obtained.  When  he  excluded  from 
that  judgment  so  much  of  that  cause  of  action  as  relates  to  this  pol- 
icy, he  as  effectually  released  so  much  of  his  right  of  action  as  if  he 
had  executed  and  delivered  a  release  under  a  seal  therefor,  and  as 
clearly  and  unequivocally  destroyed  the  defendant's  right  of  subroga- 
tion as  he  would  have  destroyed  it  by  such  release.  Any  act  which 
makes  performance  of  the  agreement  to  assign  either  impossible  or 
useless  must  relieve  the  insurance  company  from  its  concurrent  ob- 
ligation to  pay.  The  plaintiff,  in  the  present  case,  in  order  to  pro- 
tect his  larger  interests  under  the  other  policies,  and  his  interest  in 
recovery  for  loss  of  profits  which  were  uninsured,  has  seen  fit,  for 
reasons  doubtless  satisfactory  to  him,  to  sacrifice  his  own  and  the  de- 
fendant's interest  under  the  policy  in  question,  and  can  not  now  be 
heard  to  complain  of  the  result  of  his  own  course  of  conduct." 

In  a  subsequent  case  in  the  same  state  it  was  held  that  the  settle- 
ment of  a  suit  for  unliquidated  damages,  brought  by  the  insured 
against  the  wrongdoer,  when  made  with  the  approval  of  the  major- 

^Packham  v.  German,  etc.,  Ins.  Co.,  91  Md.  515,  50  L.  R.  A.  828  (1900). 


375  SUBROGATION.  §    339 

ity  of  the  insurance  companies  interested  in  the  matter,  can  not  be' 
complained  of  by  the  other  companies  that  refused  to  come  into  the 
suit.  The  court  said  :34  "It  may  be  conceded  that  the  insured  can  not 
fritter  away  the  rights  of  the  insurer  entitled  to  be  subrogated,  and 
that  he  can  not  ordinarily  make  a  compromise  without  being  re- 
sponsible to  the  insurer  for  the  amount  paid  by  him ;  but  under  such 
circumstances  as  we  have  stated  there  can,  in  our  opinion,  be  no  ques- 
tion about  his  right  to  thus  settle  a  suit  for  unliquidated  damages, 
when  the  majority  of  those  interested  not  only  approved,  but  urged 
it.  *  *  *  Where  a  compromise  is  made,  the  insured  may  retain 
out  of  the  fund  his  costs  and  reasonable  expenses  incurred  in  the 
litigation,  and  this  may  include  a  contingent  fee  to  attorneys."  The 
company  is  entitled  to  the  benefit  of  the  money  received  from  the 
wrongdoer  for  damage  done  to  the  insured  property  only.  Hence, 
where  one  who  had  suffered  loss  by  fire  recovered  from  the  wrongdoer 
the  sum  of  $9,000  for  the  loss  of  goods,  and  a  certain  other  sum  for 
the  interruption  of  his  business,  the  insurance  companies,  which  had 
previously  settled  with  the  insured  for  a  sum  equal  to  the  entire 
amount  recovered  for  both  items,  could  hold  the  insured  only  for 
pro  rata  shares  of  the  $9,000. 

But  the  fact  that  the  insurance  company  has  paid  the  amount  of 
the  policy  to  the  insured  is  no  defense  to  an  action  by  the  insured 
against  the  wrongdoer  for  damages.35  It  results  from  the  prin- 
ciple of  indemnity  that  the  insured  can  not  recover  compensation  for 
his  loss  from  both  the  insurance  company  and  the  wrongdoer;  hence, 
where  the  property  is  destroyed  by  fire  negligently  set  by  a  railroad 
company,  and  the  owner  settles  with  the  company,  and  afterwards, 
without  informing  the  insurer  of  such  fact,  receives  from  it  payment 
for  the  loss,  the  insurance  company  may  recover  back  the  monej  so 
paid.36 

A  common  carrier  may,  by  agreement  with  the  owner  of  the  prop- 

34  Svea    Assur.    Co.    v.    Packham  railroad   company   to   recover   dam- 

(Md.),  48  Atl.  359,  52  L.  R.  A.  95  ages  for  the  destruction  of  the  in- 

(1901).  sured  property  by  fire,  and  that  in 

38  Anderson  v.  Miller,  96  Tenn.  35,  the  action  the  amount  recovered 
31  L.  R.  A.  604  (1896).  In  Lake  should  be  adjudged  to  the  owner  and 
Brie,  etc.,  R.  Co.  v.  Falk,  62  Ohio  the  insurer  according  to  their  re- 
St.  297,  56  N.  E.  1020  (1900),  it  was  spective  interests, 
held  that  the  insurance  company  30  Chickasaw,  etc.,  Ins.  Co.  v.  Wei- 
should  intervene  in  an  action  ler,  98  Iowa  731,  68  N.  W.  443 
brought  by  the  owner  against  the  (1896). 


§    340  THE    STANDARD   POLICY.  376 

erty,  secure  to  himself  the  benefit  of  the  insurance  procured  by  such 
owner.  Thus,  where  the  bill  of  lading  provides  that  the  carrier, 
when  liable  for  a  loss,  shall  have  the  full  benefit  of  any  insurance 
upon  the  goods,  the  payment  of  the  loss  by  the  company  extinguishes 
the  shipper's  right  of  action  against  the  carrier  and  destroys  the  in- 
surance company's  right  to  subrogation.37 

XXV.     Reinsurance. 
Liability  for  reinsurance  shall  be  as  specifically  agreed  upon.3S 

§  340.  The  reinsurance  contract. — The  liability  on  a  contract  of 
reinsurance  is  to  be  provided  for  by  special  agreement.  Unless  an 
obligation  in  favor  of  the  original  insured  is  specifically  created  by 
the  contract  of  reinsurance,  he  is  generally  regarded  as  a  stranger 
to  such  a  contract,  and  has,  therefore,  no  claim  on  the  reinsurer.  This 
is  the  rule  declared  by  the  older  authorities,  and  is  based  strictly  on 
the  principle  of  indemnity.39  But  some  recent  cases  regard  the 
contract  as  made  for  the  benefit  of  the  original  insured.  In  Xew 
Hampshire  it  is  held  that  when  the  original  insurer  is  insolvent 
the  reinsurer  must  pay  the  amount  for  which  it  is  liable  directly  to 
the  party  ultimately  entitled  to  the  money.  In  an  action  brought 
by  the  receiver  of  an  insolvent  company  against  the  reinsurer,  the 
court  said:40  "The  defendants  received  the  full  consideration  for 
the  risk  against  which  they  insured,  and  there  is  no  reason  why  they 
should  not  be  required  to  pay  the  full  amount  of  the  loss.  The  pre- 
miums received  by  them  and  the  sum  to  be  paid  by  them  in  case  of 
loss  were  intended  to  be,  and  in  theory  of  law  are,  precisely  equiva- 
lent." So,  in  a  recent  case  in  Xorth  Carolina,  it  was  held  that  the 
insured  had  an  interest  in  the  contract  of  reinsurance  and  could  sue 
the  reinsurer,  notwithstanding  the  fact  that  he  was  not  a  party  to 
the  contract  of  reinsurance,  which  expressly  provided  that  no  such 

37  Phoenix    Ins.    Co.    v.    Brie,    etc.,  Iowa,  South  Dakota,  North  Dakota 
Transp.  Co.,  117  U.  S.  312    (1886);  and  North  Carolina.     No  such  pro- 
Roos  v.  Philadelphia,  etc.,  Ins.  Co.,  vision  is  found  in  the  standard  pol- 
13  Pa.  Super.  Ct.  563    (1899);    Mer-  icies    of    Massachusetts,    Minnesota, 
cantile  F.  Ins.  Co.  v.  Calebs,  20  N.  Maine  and  New  Hampshire. 

Y.  173  (1859).  -'"See  §  9,  supra. 

38  This  provision  is  found  in  the  *°  Hunt   v.   New   Hampshire,   etc., 
standard  policies  of  New  York,  New  Ass'n,  68  N.  H.  305,  38  Atl.  145,  38 
Jersey,   Rhode   Island,   Connecticut,  L.  R.  A.  514   (1895). 

Michigan,      Wisconsin,      Louisiana, 


REINSURANCE.  §    340 

action  could  be  maintained.  The  court  said:41  "There  is  some 
diversity  of  opinion  in  the  decisions  of  the  courts  in  our  sister  states 
and  the  general  authorities.  There  is  no  question  raised  as  to  the 
validity  of  the  insuring  and  the  reinsuring  contracts,  each  being  in 
due  form.,  and  supported  by  a  valuable  consideration.  A  policy  of  fire 
insurance  is  a  contract  of  indemnity;  and  such  contract  gives  the 
insurer  an  insurable  interest  in  the  property  insured,  coextensive 
with  its  liability.  A  contract  of  reinsurance  seems  to  be  a  union 
and  blending  of  the  business  of  the  two  companies,  presumably 
for  the  advantage  of  each  party.  The  reinsurer  absorbed  the  estate 
and  rights  of  the  reinsured,  and  assumed  the  risks  and  liabilities 
of  the  reinsured,  with  the  privilege  of  the  reinsured,  in  the  present 
case,  to  continue  issuing  new  policies  for  a  time  specified,  with  the 
same  rights  and  liabilities  under  the  new  policies  as  under  those  al- 
ready outstanding;  this  to  be  done  for  the  benefit  of  and  under  the 
direction  of  the  defendant.  The  plaintiffs  were  neither  a  party  to  nor 
in  privity  with  said  contracts.  The  question  is,  Have  they  an  in- 
terest in,  or  arising  out  of,  the  contract?  The  defendant  is  bound 
to  indemnify  the  reinsured  for  all  risks  and  loss,  and  the  reinsured,  at 
the  same  time,  is  bound  to  indemnify  the  plaintiffs  for  risk  and 
loss.  *  *  *  We  can  see  no  reason  why  plaintiffs  may  not  do 
directly  that  which  it  must  be  admitted  they  can  do  indirectly,  nor 
do  we  see  how  the  defendant  is  prejudiced  thereby.  The  defendant 
suggests  no  such  danger,  but  relies  solely  on  the  ground  that  it  has 
no  contract  with  the  plaintiffs.42  *  *  *  It  is  the  implied  right, 
arising  out  of  the  express  agreement  of  the  defendant,  that  enables 
the  plaintiffs  to  maintain  the  action.'7 

But  the  better  opinion  is  that  the  simple  contract  of  reinsurance 
is  a  contract  of  indemnity,  under  which  the  insurer  is  liable  solely 
to  the  reinsured  company,  and  not  to  the  policy-holders.43  Of  course, 
where  such  contract  also  includes  a  promise  or  agreement  to  assume 
and  pay  losses  to  the  original  insured,  a  policy-holder  may  proceed 
directly  against  the  reinsurer  upon  such  promise  or  undertaking.44 

41Shoaf  v.   Palatine  Ins.   Co.,   127  Minn.    38,    45    Am.    St.    438    (1893); 

N.  C.  308,  37  S.  E.  451   (1900).  Strong  v.  Phrenix  Ins.  Co.,  62  Mo. 

"Citing  Johannes  v.   Phenix  Ins.  289,   21  Am.  Rep.  417    (1876);    Car- 
Co.,  66  Wis.  50,  27  N.  W.  414  (1886),  rington  v.  Commercial,  etc.,  Ins.  Co., 
which  the  court  says  is  decisive  of  1  Bosw.   (N.  Y.)  152   (1857). 
this  question.  "  Barnes  v.  Hekla  F.  Ins.  Co.,  56 

"Barnes  v.  Hekla  F.  Ins.  Co.,  56  Minn.    38,    45   Am.    St.   438    (1893); 


§    341  THE    STANDARD   POLICY.  378 

XXVI.     Conditions  Affecting  Mortgagees. 

If,  with  the  consent  of  this  company,  an  interest  under  this  policy 
shall  exist  in  favor  of  a  mortgagee  or  of  any  person  or  corporation 
having  an  interest  in  the  subject  of  insurance  other  than  the  interest 
of  the  insured  as  described  herein,  the  conditions  hereinbefore  con- 
tained shall  apply  in  the  manner  expressed  in  such  provisions  and 
conditions  of  insurance  relating  to  such  interest  as  shall  be  written 
upon,  attached,  or  appended  hereto.*^ 

§341.  Special  provisions. — The  relations  between  the  insurer  and 
a  mortgagee,  to  whom  the  policy  is  made  payable  as  his  interest  may 
appear,  are  to  be  determined  by  such  special  provisions  as  are  at- 
tached to  the  policy.  In  the  absence  of  such  provisions  a  mortgagee 
to  whom  a  policy  is  made  payable  stands  in  the  position  of  the  mort- 
gagor, as  far  as  the  insurance  company  is  concerned,  and,  being 
bound  by  his  acts,  can  recover  only  when  there  has  been  no  forfeiture 
by  such  mortgagor.46 

A  mortgagee,  in  the  absence  of  any  provision  making  the  policy 
payable  to  him,  has  no  interest  in  a  policy  held  by  the  mortgagor.47 

Glen  v.  Hope,  etc.,  Ins.  Co.,  56  N.  Y.  for  any  increase  of  risks  not  paid 

379    (1874);    Cahen   v.    Continental  for  by  the  insured;    and  whenever 

L.  Ins.  Co.,  69  N.  Y.  300  (1877).  this  company  shall   be  liable  to  a 

45  This    clause    is    found    in    the  mortgagee  for  any  sum  for  loss  un- 

standard    policies    in    use    in    New  der  this  policy,  for  which  no  liabil- 

York,    New    Jersey,    Rhode    Island,  ity  exists  as  to  the  mortgagor,  or 

Connecticut,     Michigan,     Louisiana,  owner,  and  this  company  shall  elect 

Wisconsin,     Iowa,     North     Dakota,  by  itself,  or  with  others,  to  pay  the 

South  Dakota  and  North  Carolina,  mortgagee  the  full  amount  secured 

Massachusetts,     Minnesota,     Maine  by   such   mortgage,   then  the   mort- 

and  New  Hampshire  have  a  clause  gagee  shall  assign  and  transfer  to 

in  their  standard  policies  with  refer-  the  companies  interested,  upon  such 

ence  to  mortgagees  as  follows:     "If  payment,    the    said    mortgage,    to- 

this  policy  shall  be  made  payable  to  gether  with  the  note  and  the  debt 

a  mortgagee  of  the  insured  real  es-  thereby  secured." 

tate  no  act  or  default  of  any  person  *•  Security  Co.  v.  Panhandle  Nat'l 

other  than   such  mortgagee   or  his  Bank,  93    Tex.    575,    57    S.    W.    22 

agents,  or  those  claiming  under  him,  (1900);  Bates  v.  Equitable  Ins.  Co., 

shall  affect  such  mortgagee's  right  10  Wall.  (U.  S.)  33  (1869);  Harring- 

to  recover  in  case  of  loss  on  such  ton  v.  Fitchburg,  etc.,  Ins.  Co.,  124 

real  estate;  provided,  that  the  mort-  Mass.  126  (1878). 

gagee  shall,  on  demand,  pay  accord-  "  Lindley  v.  Orr,  83   111.  App.  70 

ing  to  the  established  scale  of  rates  (1898). 


379  CONDITIONS   AFFECTING    MORTGAGEES.  §    341 

A  common  form  of  mortgage  clause  provides  that  "Loss  or  dam- 
age, if  any,  under  this  policy  shall  be  payable  to  -  — ,  as  mort- 
gagee, as  his  interest  may  appear,  and  this  insurance  as  to  the  in- 
terest of  the  mortgagee  therein  shall  not  be  invalidated  by  any  act 
or  neglect  of  the  mortgagor  or  owner  of  the  within  described  prop- 
erty, nor  by  any  foreclosure  or  other  proceedings  or  notice  of  sale 
relating  to  the  property,  nor  by  any  change  in  the  title  or  ownership 
of  the  property,  nor  by  the  occupation  of  the  premises  for  purposes 
more  hazardous  than  are  permitted  by  this  policy,  provided  that  in 
case  the  mortgagor  or  owner  shall  neglect  to  pay  any  premium  due 
under  this  policy  the  mortgagee  shall,  on  demand,  pay  the  same." 
It  is  also  generally  provided  that  the  mortgagee  shall  notify  the 
company  of  any  change  of  ownership  or  increase  of  risk  which  shall 
come  to  his  knowledge.  A  rider  of  this  character  is  an  independent 
contract  between  the  company  and  the  mortgagee.48 

It  has  been  held  that  the  provision  requiring  the  mortgagee  to  notify 
the  insured  of  any  change  in  ownership  coming  to  his  knowledge 
is  directory  merely,  and  that  a  change  to  the  mortgagee's  knowledge 
which  did  not  increase  the  risk  did  not  invalidate  the  policy,  although 
the  company  was  not  notified.49 

A  mortgagee  to  whom  a  policy  is  payable  in  case  of  loss,  as  his 
interest  may  appear,  may,  when  the  mortgagor  has  forfeited  his  right 
to  recover,  collect  only  the  amount  due  on  the  mortgage  when  the 
contract  was  made.  Such  a  provision  contemplates  a  possible  diminu- 
tion of  the  interest  of  the  mortgagee  by  part  payment  of  his  debt,  but 
does  not  include  additional  claims.  In  reference  to  the  history  of 
this  provision,  the  supreme  court  of  Massachusetts  said,50  "that  at  first 
the  policy  was  usually  issued  to  the  mortgagor  in  the  common  form, 
and  was  then  assigned  to  the  mortgagee,  to  the  extent  of  his  interest, 
the  insurance  company  assenting  to  the  assignment;  that  afterwards, 
the  provisions  for  the  benefit  of  the  mortgagee  were  inserted  in  the 
body  of  the  policy,  but  that  such  policies,  unless  there  were  stipula- 
tions to  the  contrary,  were  avoided,  as  against  the  mortgagee,  by  any 
act  of  the  mortgagor  which  avoided  the  policy  as  to  him ;  and  that  the 
present  form  was  adopted  in  order  to  give  the  mortgagee  a  better  se- 

48  Dwelling-House  Ins.  Co.  v.  Kan-  curity  Ins.  Co.,  168  Mass.  147,  46  N. 
sas  Loan,  etc.,  Co.,  5  Kan.  App.  137,  E.  390  (1897);  Palmer  Sav.  Bank  v. 
48  Pac.  891    (1897).  Insurance  Co.,  166  Mass.  189,  44  N. 

49  Whitney   v.   American    Ins.    Co.  E.  211  (1896);  Foster  v.  Van  Reed, 
(Cal.),  56  Pac.  50  (1899).  70  N.  Y.  19,  26  Am.  Rep.  544  (1877). 

50  Attleborough   Sav.   Bank  v.   Se- 


§    341  THE    STANDARD    POLICY.  380 

curity,  but  that  the  effect  was  the  same  as  if  the  mortgagor  had  taken 
out  the  insurance  in  his  own  name  and  then  assigned  it  to  the  mort- 
gagee to  the  extent  of  his  interest,  and  the  insurance  company  had  as- 
sented to  the  assignment,  and  had  promised  the  mortgagee  that  no  act 
of  the  mortgagor  should  defeat  the  right  of  the  mortgagee  to  recover  to 
the  extent  of  his  interest.  But  whether  the  clause  is  to  be  considered 
as  an  assignment  by  the  mortgagor  of  an  insurance  upon  his  interest, 
or  as  a  contract  made  with  the  insured  by  which  in  a  certain  con- 
tingency it  promises  to  pay  to  the  mortgagee  an  amount  to  be  de- 
termined, it  seems  to  us  clear  that  the  nature  of  the  interest  and 
the  extent  of  the  risk  must  be  made  known  at  the  time  when  the 
contract  is  made,  in  order  that  the  premium  may  be  measured  thereby. 
While  the  insurance  company  can  not  be  compelled  to  pay  more  than 
the  face  of  the  policy,  yet,  to  obtain  the  advantages  of  the  subroga- 
tion if  the  plaintiff's  contention  is  correct,  it  may  be  compelled  to 
pay  several  times  that  amount.  The  clause  in  regard  to  subrogation 
is  inserted  as  of  value  to  the  company  and  must  be  taken  into  con- 
sideration in  measuring  the  risk  assumed  and  the  consideration  paid 
therefor;  but  if  this  amount  can  not  be  determined  when  the  con- 
tract is  made,  and  may  be  so  great  as  to  make  the  subrogation  clause 
'worthless,  it  ceases  to  be  one  of  the  elements  of  the  contract." 

An  action  on  a  policy  payable  to  a  mortgagee,  as  his  interest  may 
appear,  may  be  begun  before  the  debt  secured  by  the  mortgage  is  due 
and  payable.51  The  insurance  company  must  pay  the  loss  to  the 
creditor,  and  can  not  require  him  to  first  proceed  against  his  debtor.52 
The  fact  that  the  mortgagee  holds  collateral  security  which  is  ample 
to  pay  his  debt  is  no  defense  in  an  action  by  the  mortgagee  against 
the  insurance  company.53  But  the  contract  generally  provides  that 
upon  payment  of  the  insurance  to  the  mortgagee,  the  insurer  shall 
be  subrogated  to  the  rights  of  the  mortgagee  in  such  collaterals.54 
Where  insurance  is  procured  by  a  mortgagee  on  his  own  interest,  the 
mortgagor  has  no  interest  in  the  proceeds,  and  can  not  compel  its  ap- 
plication to  the  reduction  of  his  debt.55 

Where  the  policy  is  payable  to  a  mortgagee,  as  his  interest  may 

51  Planters',  etc.,   Ins.   Co.  v.   Sav-        M  Kernochan    v.    New   York,    etc., 
ings,  etc.,  Co.,  68  Ark.  8,  56  S.  W.     Ins.  Co.,  17  N.  Y.  428  (1858). 

443    (1900).  51  Alamo    F.     Ins.     Co.    v.     Davis 

52  Excelsior   F.    Ins.   Co.   v.   Royal     (Tex.),  60  S.  W.  802  (1901). 

Ins.  Co.,  55  N.  Y.  343,  14  Am.  Rep.         M  Foster  v.  Van  Reed,  70  N.  Y.  19, 
271    (1873).  26  Am.  Rep.  544  (1877). 


381  CONSTRUCTION — MUTUAL    COMPANIES OTHER    CONDITIONS.  §    342 

appear,  the  balance,  if  any,  to  the  mortgagor,  and  the  indebtedness 
equals  the  total  amount  of  the  loss,  the  action  must  be  brought  by  the 
mortgagee.  After  loss  the  obligation  of  the  insurance  company  is  a 
contract  for  the  payment  of  money,  and  suit  must  be  brought  in  the 
name  of  the  beneficial  owner.56 

XXVII.     Construction   of   Terms — Mutual   Companies. 

Wherever  in  this  policy  the  word  "insured"  occurs,  it  shall  be  held 
to  include  the  legal  representative  of  the  insured,  and  wherever  the 
word  "loss"  occurs,  it  shall  be  deemed  the  equivalent  of  "loss  or  dam- 
age."57 

If  this  policy  be  made  by  a  mutual  or  other  company  having  special 
regulations  lawfully  applicable  to  its  organization,  membership,  pol- 
icies or  contracts  of  insurance,  such  regulations  shall  apply  to  and 
form  a  part  of  this  policy  as  the  same  may  be  written  or  printed  upon, 
attached,  or  appended  hereto.58 

§  342.  In  general. — The  provisions  with  reference  to  the  construc- 
tion of  terms,  and  the  application  of  the  standard  form  of  policy  to 
mutual  insurance  companies,  are  clear,  and  require  no  comment.  The 
general  rules  of  construction  have  been  considered  elsewhere. 

XXVIII.     Indorsement  of  Other  Conditions. 

This  policy  is  made  and  accepted  subject  to  the  foregoing  stipula- 
tions and  conditions,  together  with  such  other  provisions,  agreements, 
or  conditions  as  may  be  indorsed  hereon  or  added  hereto.59 

58  Capital  City  Ins.  Co.  v.  Jones  lina  and  Rhode  Island.  It  is  not 

(Ala.),  30  So.  674  (1901).  contained  in  the  standard  policies 

57  This  provision  is  found  in  the  of  Massachusetts,  Minnesota  and 

standard  policies  in  use  in  New  Maine.  New  Hampshire  provides 

York,  New  Jersey,  Connecticut,  in  the  cancellation  clause  that  "mu- 

Michigan,  Rhode  Island,  Wisconsin,  tual  companies  may  vary  this  clause 

Iowa,  South  Dakota,  Louisiana,  to  suit  their  methods  of  business." 

North  Dakota  and  North  Carolina.  59  This  provision  is  found  in  the 

It  is  not  contained  in  the  standard  standard  policies  of  New  York,  New 

policies  of  Massachusetts,  Minne-  Jersey,  Rhode  Island,  Connecticut, 

sota,  Maine  and  New  Hampshire.  Louisiana,  Iowa,  Michigan,  Wiscon- 

68  This  provision  appears  in  the  sin,  South  Dakota,  North  Dakota, 

standard  policies  of  New  York,  New  and  North  Carolina.  The  standard 

Jersey,  Connecticut,  Michigan,  policies  of  Massachusetts,  Minne- 

Louisiana,  Wisconsin,  Iowa,  North  sota,  Maine  and  New  Hampshire  do 

Dakota,  South  Dakota,  North  Caro-  not  contain  such  a  provision. 


PART  VII. 

LIFE,  ACCIDENT  AND   INDEMNITY  INSURANCE. 


CHAPTEE  XIV. 


STIPULATIONS    OF    LIFE   INSURANCE    POLICY. 


SEC. 

350.  General  statement. 

I.  Formal  Part  of  Contract. 

351.  Parties. 

352.  The     beneficiary  —  Manner     of 

designation — Right  to  fund. 

353.  Transmission     of     interest     of 

beneficiary. 

354.  Rights  of  beneficiary. 

355.  Reservation     of     a     right     to 

change  beneficiary. 

356.  Manner  of  changing  beneficiary. 

357.  Right  to  proceeds — Bankruptcy. 

II.  Payment  of  Premium  a  Condi- 

tion Precedent. 

358.  Payment  of  premium — Illustra- 

tions. 

359.  Time  when  premium  is  due — 

Construction    by    agent — Es- 
toppel. 

III.  Powers  of  Agent. 

360.  Agents. 

IV.  Statement  of  Age. 

361.  Age. 

V.  Assignment  of  Policy. 

362.  Assignability. 

363.  Notice  to  company. 

364.  Manner  of  making  assignment. 

365.  Assignment    of    policy    by    as- 

signee. 


VI.  Incontestable  Clause. 
SEC. 

366.  Incontestable. 

VII.  Special  Privileges. 

367.  Special  privileges. 

VIII.  Application  Part  of  Contract. 
367a.  Provisions  in  the  application. 

(a)  Excepted  Risks. 

368.  Suicide — Sane  or  insane. 

369.  Where  there  is  no  provision  as 

to  the  effect  of  suicide. 

370.  Suicide — Construction. 

371.  Presumption — Burden  of  proof. 

372.  Residence  and  occupation. 

373.  Death  in  violation  of  law  or  at 

the  hands  of  justice. 

(o)  Statements  with  Reference  to 
Habits,  Physical  Condition, 
Etc. 

374.  Habits. 

375.  Health  and  freedom  from  dis- 

ease. 

376.  Bodily  injuries. 

377.  Medical  attendance. 

378.  Family  relationship. 

379.  Other  insurance. 

380.  Rejection    of    former    applica- 

tion. 


§  350.    General   statement. — There   is  no   standard   form   of  life 
insurance  policy.     Each  company  uses  the  form  which  seems  best 

(382) 


383  STIPULATIONS    OF   LIFE    INSURANCE    POLICY.  §    351 

adapted  to  its  own  manner  of  doing  business;  but,  as  in  fire  insur- 
ance, the  tendency  is  strongly  toward  the  adoption  of  a  simple  form, 
with  liberal  provisions  and  stipulations  for  the  benefit  of  the  in- 
sured. The  form  here  adopted  is  now  in  use  by  one  of  the  largest 
life  insurance  companies  in  the  country,  and  is  noticeable  for  its 
simplicity  and  clearness. 

I.     Formal  Part  of  Contract. 

In  consideration  of  the  statements  and  agreements  in  the  applica- 
tion for  this  policy,  which  are  hereby  made  a  part  of  this  contract, 

and  of  the  sum  of  dollars,  the  receipt  of  which  is  hereby 

acknowledged,  and  the  payment  of  a  like  sum  on  the day  of 

in  every  year  until  full  years'  premiums  shall  have 

been  paid,  or  until  the  death  of  the  insured,  should  that  event  sooner 
occur,  DOES  INSURE  the  life  of  -  — ,  of  -  —  (herein 

called  the  insured),  in  the  amount  of dollars  for  the  term  of 

life,  payable  at  its  office  in  the  city  of  -  — ,  to  -  — ,  executors, 
administrators  or  assigns,  upon  due  and  satisfactory  proof  of  interest 
and  of  the  death  of  said  insured,  deducting  therefrom  all  indebted- 
ness to  the  company  on  this  policy,  together  with  the  balance,  if  any, 
of  the  current  year's  premium. 

§  351.  Parties. — There  are  commonly  but  two  parties  to  a  fire  in- 
surance contract,  although  there  may  be  a  third  party  to  whom  the 
fund  or  a  part  thereof  has  been  assigned.  In  life  insurance  con- 
tracts, however,  there  are  often  four  parties  who  must  be  considered, — 
the  insured,  the  insurer,  the  beneficiary,  and  the  holder  of  the  policy. 
The  rules  governing  the  rights  and  capacities  of  parties  have  been 
already  considered.1 

§  352.    The  beneficiary — Manner  of  designation — Right  to  fund. — 

The  rights  of  beneficiaries  are  closely  connected  with  the  right  of 
the  insured  to  assign  the  policy.  A  beneficiary  is  a  person  to  whom 
the  insured  directs  the  payment  of  the  fund  upon  his  death.2  This 

1  As  to  the  right  of  an  infant  to     v.  Hilliard,  63  Ohio  St.  478,  59  N.  E. 
make  a  contract  of  insurance,   see     230,  81  Am.  St.  644  (1900). 
note  to  Craig  v.  Van  Bebber,  18  Am.        2  As  to  who  may  be  a  beneficiary, 
St.   569    (1890),  and  cases  cited  at    see  Langdon  v.  Union,  etc.,  Ins.  Co., 
§    11,   supra;   Union,   etc.,    Ins.   Co.     14  Fed.  272,  Woodruff  Ins.  Gas.  359 

(1882). 


352 


LIFE,,    ACCIDENT   AND   INDEMNITY   INSURANCE. 


384 


fund  belongs  to  the  person  so  designated  as  beneficiary  in  the  pol- 
icy, although  a  different  person  is  named  in  the  application.3  The 
language  used  in  designating  the  beneficiary  will,  if  possible,  be  so 
construed  as  to  carry  out  the  intention  of  the  parties.4  When  it  is 
payable  to  the  "children"  of  the  insured  it  includes  his  children 
by  a  former  wife,5  but  not  a  child  of  his  wife  by  a  former  husband.6 
Under  a  policy  payable  to  the  wife  of  the  insured,  and,  upon  her 
death  before  the  insured,  to  "their  children,"  a  child  by  a  woman 
to  whom  the  insured  is  married  after  the  death  of  his  first  wife  is 
not  a  beneficiary.7 

"Children"  includes  an  adopted  child,8  but  not  a  grandchild.9 
Where  the  by-laws  of  the  company  require  that  the  insured  shall 
designate  as  beneficiary  some  one  who  is  "dependent"  upon  him,  the 
term  is  strictly  construed  and  confined  to  those  who  are  actually 
dependent  upon  him  for  support.10  It  includes  a  wife,11  but  not  a 
concubine12  or  creditor.13 


3  Hunter  v.    Scott,   108   N.   C.   213 
(1891).     A   promise   by   a   wife   to 
her  husband  that  she  will  pay  his 
debts  does  not  create   a   lien   upon 
the  proceeds  of  a  benefit  certificate 
on  his  life,  of  which  she  is  the  ben- 
eficiary:      Fisher    v.    Donovan,    57 
Neb.  361,  44  L.  R.  A.  383,  77  N.  W. 
778    (1899).      The   payment   of   pre- 
miums by  a  person  other  than  the 
insured  does  not,  in  the  absence  of 
an  agreement  to  that  effect,  create 
a  lien  on  the  proceeds:     Lennon  v. 
Metropolitan   L.   Ins.   Co.,   45   N.   Y. 
Supp.    1033,    20    Misc.    (N.    Y.)    403 
(1897). 

4  Thus,  the  word  "and"  in  a  clause 
making  the   policy   payable   to   "A, 
trustee  and  the  children  of  B,"  the 
latter    being   the    insured,    will    be 
read  "for"  in  order  to  carry  out  the 
apparent   intention    of   the    insured 
to    make    his    children    the    benefi- 
ciaries:     Atkins  v.   Atkins,    70   Vt. 
565,  41  Atl.  503   (1898). 

5  McDermott    v.    Centennial,    etc., 
Ass'n,   24  Mo.  App.   73    (1887);    Ev- 
ans    v.     Opperman,     76     Tex.     293 
(1890). 


6  Koehler  v.  Centennial,  etc.,  Ins. 
Co.,  66  Iowa  325  (1885). 

7^Etna,  etc.,  Ins.  Co.  v.  Clough,  68 
N.  H.  298,  44  Atl.  520  (1895). 

8  Martin  v.  JEtna,  etc.,  Ins.  Co.,  73 
Me.  25  (1881). 

"Cutchin  v.  Johnston,  120  N.  C. 
51,  26  S.  E.  698  (1897);  United 
States  Trust  Co.  v.  Mutual,  etc.,  Ins. 
Co.,  115  N.  Y.  152  (1889);  Winsor 
v.  Odd  Fellows',  etc.,  Ass'n,  13  R. 
I.  149  (1880).  Contra,  Estate  of 
Conrad,  89  Iowa  396  (1893);  Duvall 
v.  Goodson,  79  Ky.  224  (1880). 

10Ballou  v.  Gile,  50  Wis.  614 
(1880);  McCarthy  v.  Supreme 
Lodge,  153  Mass.  314  (1891).  It 
does  not  include  a  member's  fiancee 
unless  dependent  as  a  matter  of 
fact:  Alexander  v.  Parker,  144  111. 
355  (1893). 

"Ballou  v.  Gile,  50  Wis.  614, 
Woodruff  Ins.  Gas.  371  (1880). 

12  Keener  v.  Grand  Lodge,  38  Mo. 
App.  543  (1889). 

13  Skillings  v.  Massachusetts  Ben. 
Ass'n,    146    Mass.    217    (1888).     See 
Lavigne  v.  Ligue  des  Patriotes,  178 
Mass.  25,  54  L.  R.  A.  814  (1901). 


385  STIPULATIONS   OF    LIFE   INSURANCE    POLICY.  §    352 

"Belatives"  include  those  by  marriage  as  well  as  by  blood,14  but  not 
an  illegitimate  child. 14a  Under  a  policy  which  directs  payment  to  any 
relative  of  the  insured,  or  to  any  person  equitably  entitled  to  it  by 
having  incurred  expenses  on  behalf  of  the  insured,  a  son  of  the  insured 
not  designated  as  beneficiary  can  not  enforce  payment  although  he  has 
paid  the  premiums.  A  suit  can  only  be  maintained  by  the  executor 
or  administrator  of  the  insured,  with  whom  the  contract  was  made.15 

The  provision  does  not  give  such  persons  a  vested  interest  as 
beneficiaries;  it  merely  gives  the  company  an  option  to  pay  the  in- 
surance to  them.16  Where  the  policy  is  payable  to  the  "executors, 
administrators  or  assigns  of  the  insured,  unless  settlement  shall  be 
made  under  the  provisions  of  article  second,  hereinafter  contained," 
and  this  article  provides  that  "the  company  may  pay  the  sum  of 
money  insured  hereby  to  any  relative  by  blood  or  connection  by  mar1- 
riage  of  the  insured,  or  to  any  other  person  appearing  to  said 
company  to  be  equitably  entitled  to  the  same  by  reason  of  having 
incurred  expenses  in  any  way  or  on  behalf  of  the  insured  for  his  or 
her  burial,  or  for  any  other  purpose,"  the  company  may  pay  the 
policy  to  the  widow  of  the  insured,  and,  in  the  absence  of  fraud,  this 
will  discharge  its  obligation.17 

The  word  "heirs"  describes  those  who  take  under  the  statute  of 
descent  and  distribution.  By  the  weight  of  authority,  when  used 
in  an  instrument  to  designate  the  persons  to  whom  personal  prop- 
erty is  thereby  transferred,  given,  or  bequeathed,  and  the  context 
does  not  explain  it  otherwise,  it  means  those  who  would  under  the 
statute  of  distribution  be  entitled  to  the  personal  estate  in  the  event 
of  death  or  intestacy.18  It  generally  includes  the  widow,  but  does 
not  include  executors.19 

A  wife  who  is  separated  from  her  husband  may  receive  benefits 
under  a  certificate  which  the  insured  is  entitled  to  hold  for  the 
benefit  of  his  family.20 

14  Simcoke    v.    Grand    Lodge,    84  17  American   Security,   etc.,  Co.  v. 

Iowa  383  (1892).  Prudential    Ins.    Co.,    16    App.    Cas. 

14aLavigne  v.  Ligue  des  Patriotes,  (D.  C.)  318  (1900). 

178  Mass.  25,  54  L.  R.  A.  814  (1901).  "Johnson  v.  Knights  of  Honor,  53 

"Lewis   v.    Metropolitan    L.    Ins.  Ark.  255  (1890),  and  cases  cited. 

Co.  (Mass.),  59  N.  E.  439  (1901).  "Loos  v.  John  Hancock,  etc.,  Ins. 

"Wokal  v.   Belsky,   53   App.   Div.  Co.,  41  Mo.  538  (1867). 

(N.   Y.)    167,    65    N.   Y.    Supp.    815  20  Smith  v.  Boston,  etc.,  Ass'n,  168 

(1900).  Mass.  213,  46  N.  E.  626  (1897). 

25 — ELLIOTT  INS. 


§    352  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  386 

The  words  "legal  representatives"  refer  to  the  executors  and  ad- 
ministrators21 rather  than  to  the  heirs  or  next  of  kin  of  the  insured.22 
But  this  is  not  always  true.  Thus  it  was  said  in  Minnesota  :23  "Not- 
withstanding the  loose,  inaccurate  and  apparently  contradictory  use 
of  terms  in  the  application  and  policy,  we  are  satisfied  that  the  heirs 
(including  the  widow)  of  the  deceased  are  the  beneficiaries  of  the 
policy,  and  that  the  words  'legal  representatives/  as  used  therein, 
must  be  construed  as  meaning  heirs  or  next  of  kin,  and  not  executors 
or  administrators.  It  is  always  permissible  to  construe  these  words 
in  that  way,  especially  in  wills  and  policies  of  life  insurance,  wherever 
it  is  apparent  from  the  context  or  subject-matter  that  they  were  used 
in  that  sense.  They  will  be  construed  in  that  way  more  readily  in 
policies  of  life  insurance  than  in  almost  any  other  kind  of  instru- 
ment for  the  reason  that  such  insurance  is  very  commonly  intended 
as  a  provision  for  the  family  of  the  insured.  A  controlling  fact  in 
this  case  is,  that  whenever  the  words  'personal  representatives'  are 
used,  they  have  reference  not  to  the  person  entitled  merely  to  receive 
the  money,  but  to  those  for  whose  'benefit'  or  'use'  the  policy  is  taken 
or  the  money  is  payable.  It  is  not  to  be  supposed  that  the  insured 
intended  his  executors  or  administrators  personally  to  be  the  bene- 
ficiaries of  the  policy." 

So,  it  was  said  in  Maryland:24  "The  term  'legal  representatives' 
is  not  necessarily  restricted  to  the  personal  representatives  of  one 
deceased,  but  is  sufficiently  broad  to  cover  all  persons  who,  with  re- 
spect to  his  property,  stand  in  his  place,  and  represent  his  interests, 
whether  by  transfer  by  his  own  act  or  by  operation  of  law.  It  may 
in  this  case  include  assigns  as  well  as  executors  and  administrators." 

Where  the  policy  is  payable  to  "estate,"  it  is  collectible  by  the  legal 
representatives  of  the  insured.25  The  surrender  value  of  a  policy 

"Johnson   v.   Van   Epps,    110    111.  v.  Armstrong,  117  U.  S.  591   (1886). 

551    (1884);    Sulz    v.    Mutual,    etc.,  in   Griswold  v.   Sawyer,   125   N.  Y. 

Ass'n,  145  N.  Y.  563  (1895).  411  (1891),  it  was  held  that  a  policy 

**  Pittel  v.  Fidelity,  etc.,  Ass'n,  86  payable    to    his    "legal    representa- 

Fed.  255,  30  C.  C.  A.  21  (1898).  tives"  can  only  be  assigned  by  the 

28  Schultz    v.    Citizens',    etc.,    Ins.  consent    of    the    beneficiary    named 

Co.,  59  Minn.  308   (1894),  and  cases  therein,  and  the  term  "legal  repre- 

cited.  sentative"  as  employed  in  the  policy 

**  Robinson  v.   Hurst,   78   Md.   59,  means  the  children  or  heirs  at  law 

20  L.  R.  A.  761  (1893);  quoted  from  of  the  deceased. 
New  York,  etc.,  Ins.  Co.  v.  Flack,  3        K  Basye    v.    Adams,    81    Ky.    368 

Md.   341,   56  Am.   Dec.   742    (1852);  (1883). 
approved  in  New  York,  etc..  Ins.  Co. 


387  STIPULATIONS    OF    LIFE   INSURANCE   POLICY.  §    353 

which  the  statute  provides  shall  be  payable  in  cash,  when,  after  the 
payment  of  two  full  annual  premiums,  the  insurable  interest  in  the 
life  of  the  insured  is  terminated,  is  payable  to  the  insured,  and  not  to 
the  beneficiaries  named  in  the  policy.26 

Where  the  policy  is  for  the  benefit  of  the  wife  and  children  of  the 
insured,  and  is  payable  to  "the  beneficiaries  or  their  executors,  ad- 
ministrators, or  assigns/'  and  "in  case  of  the  death  of  said  bene- 
ficiary," before  the  death  of  the  insured,  the  amount  is  to  be  paid  to 
the  executors  or  administrators  of  the  insured,  the  personal  repre- 
sentatives of  the  insured  take  the  money  only  after  the  death  of  all 
the  beneficiaries  before  the  insured.27 

Where  the  policy  provides  that  if  the  assured  lives  beyond  a  certain 
date,  a  fractional  part  of  the  amount  shall  be  payable  to  him,  his 
executors,  or  assigns,  a  beneficiary  who,  in  the  absence  of  the  as- 
sured, has  paid  premiums  up  to  that  time  may  recover  the  full  amount 
of  the  policy  upon  the  presumption  of  the  death  of  the  insured, 
after  his  absence  from  the  state  for  seven  years  without  being  heard 
from.  Should  the  assured  thereafter  return,  he  would  be  estopped 
from  making  any  claim  under  the  policy.28 

§  353.  Transmission  of  interest  of  beneficiary. — By  the  weight  of 
authority,  where  the  policy  is  payable  to  a  wife  and  children,  the 
heirs  of  a  child  who  dies  before  the  death  of  the  insured  take  the 
interest  of  such  deceased  child.  Thus,  where  the  policy  was  payable 
to  the  children  of  the  insured  if  the  mother  was  not  living  at  his 
death,  it  was  held  that  the  children  had  a  vested  though  contingent 
interest  in  the  policy,  and  on  the  death  of  one  of  them  before  the 
mother's  death,  his  interest  descended  to  his  widow  and  children.29 
So,  where  the  wife  insures  her  interest  in  the  life  of  her  husband  for 
her  own  benefit  if  she  survives  him,  otherwise  for  the  benefit  of  her 
children,  and  dies  during  his  lifetime,  leaving  children  surviving  her 
who  also  die  during  his  life,  the  proceeds  of  the  policy  go  to  the  ad- 
ministrator of  the  children,  and  not  to  the  estate  of  the  insured.30 

26  Hazen  v.  Massachusetts,  etc.,  *>  Voss  v.  Connecticut,  etc.,  Ins. 

Ins.  Co.,  170  Mass.  254,  49  N.  E.  119  Co.,  119  Mich.  161,  44  L.  R.  A.  689, 

(1898).  77  N.  W.  697  (1899). 

"Clark  v.  Dawson,  195  Pa.  St.  ""Millard  v.  Brayton,  177  Mass. 

137,  45  Atl.  674  (1900).  533,  59  N.  E.  436,  52  L.  R.  A.  117 

28  Mutual,  etc.,  Ins.  Co.  v.  Martin  (1901).  See  Smith  v.  vEtna  L.  Ins. 

(Ky.),  55  S.  W.  694  (1900).  Co.,  68  N.  H.  405,  44  Atl.  531  (1896). 


§    353  LIFE,   ACCIDENT   AND   INDEMNITY    INSUKANCE.  388 

A  policy  was  made  payable  to  the  wife  of  the  insured  if  living  at 
the  time  of  his  death,  but  in  the  event  she  should  die  before  his  de- 
cease, then  "to  their  children  for  their  use,  or  to  their  guardian  if 
under  age/'  At  the  time  the  policy  was  issued  the  parties  had  nine 
living  children,  three  of  whom  died  before  their  mother.  Upon  the 
death  of  the  insured,  leaving  the  six  children  surviving,  the  ques- 
tion was  whether  the  children  took  each  an  interest  in  the  policy 
immediately  upon  its  delivery,  and,  if  so,  were  the  interests  of  the 
three  whose  deaths  antedated  that  of  their  mother  transmitted  to 
their  distributees  and  representatives.  The  court,  following  what 
appears  to  be  the  weight  of  authority,  held  that  each  child,  upon 
the  delivery  of  the  policy,  took  a  transmissible  interest  in  it,  and  that 
the  mother  having  died  before  the  father,  at  his  death  the  distributee 
of  the  dead  child  stood  in  the  place  of  its  parent  and  was  entitled 
to  share  with  the  living  children  in  the  insurance  fund.  Quoting 
from  an  early  Connecticut  case,  it  was  said:31  "The  moment  this 
policy  was  executed  and  delivered  it  became  property,  and  the  title 
to  it  vested  in  some  one.  It  will  not  be  claimed  that  it  vested  in 
the  person  whose  life  was  insured.  It  must  have  vested,  then,  in  all, 
or  in  a  part,  of  the  payees.  The  payees  consisted  of  two  parties,  the 
wife  and  the  children.  As  only  one  could  take  and  enjoy  the  prop- 
erty ultimately,  it  did  not  vest  in  all  as  tenants  in  common,  nor  did 
it  vest  in  either  so  as  to  give  a  right  to  the  present  enjoyment  of  it. 
It  was  not,  however,  a  mere  expectancy  nor  a  naked  possibility,  but 
it  was  a  possibility  coupled  with  a  present  interest.  It  was  visible, 
tangible  property,  and,  like  any  other  insurance  policy,  it  was  capable 
of  assignment  and  had  an  appreciable  value.  Each  party  took  a 
conditional,  not  an  absolute  right  to  the  whole  policy.  *  *  * 
The  right  to  the  policy,  in  a  strict  sense,  was  not  contingent ;  the  pos- 
session and  enjoyment  of  the  fund  thereby  created  were  postponed  to 
the  future,  and  were  contingent.  This  contingency  applied  to  both 
parties,  to  the  wife  as  well  as  to  the  children.  *  *  *  In  respect 
to  each  it  was  then  a  present  right  to  the  future  enjoyment  of  prop- 
erty, but  it  was  liable  to  be  defeated  by  a  subsequent  contingency, 
and  was  certain  to  be  defeated  as  to  one  of  them.  That  such  a 

81  Glenn  v.  Burns,  100  Tenn.  295,  St.   396    (1893),  annotated;    Hooker 

Woodruff  Ins.  Gas.  372  (1898);  Con-  v.  Sugg,  102  N.  C.  115,  8  S.  E.  919 

tinental   L.   Ins.   Co.   v.   Palmer,   42  (1889);   Conigland  v.  Smith,  79  N. 

Conn.  60   (1875);  Estate  of  Conrad,  C.  303  (1878). 
89  Iowa  396,  56  N.  W.  535,  48  Am. 


389  STIPULATIONS    OF    LIFE   INSURANCE   POLICY.  §    354 

right  is  recognized  as  property  and  is  transmissible  to-  heirs  is  a 
proposition   abundantly   sustained  by  the   authorities." 

Other  courts  reject  this  view,  and  hold  that  on  the  delivery  of  the 
policy,  the  children  then  alive  have  a  contingent  interest,  but  say 
that  it  is  not  transmissible.32 

§  354.  Rights  of  beneficiary. — In  ordinary  life  insurance,  where 
no  power  of  disposition  is  reserved  to  the  insured,  the  beneficiary,  im- 
mediately upon  the  issuance  of  the  policy,  acquires  a  vested  right 
therein  which  can  not  be  impaired  without  his  consent.33  The  rule 
is  thus  stated  by  the  supreme  court  of  the  United  States:34  "We 
think  it  can  not  be  doubted  that  in  the  instance  of  contracts  of  in- 
surance with  a  wife  or  children,  or  both,  upon  their  insurable  inter- 
est in  the  life  of  the  husband  or  father,  the  latter,  while  they  are 
living,  can  exercise  no  power  of  disposition  over  the  same  without 
their  consent;  nor  has  he  any  interest  therein  of  which  he  can  avail 
himself,  nor  upon  his  death  have  his  personal  representatives  or  his 
creditors  any  interest  in  the  proceeds  of  such  contracts,  which  belong 
to  the  beneficiaries  to  whom  they  are  payable.  It  is  indeed  the 
general  rule  that  a  policy,  and  the  money  to  become  due  under  it,  be- 
long, the  moment  it  is  issued,  to  the  person  or  persons  named  in  it  as 
beneficiary  or  beneficiaries,  and  that  there  is  no  power  in  the  person 
procuring  the  insurance  by  any  act  of  his,  by  deed  or  by  will,  to 
transfer  to  any  other  person  the  interest  of  the  person  named." 

In  Wisconsin  the  insured  may  dispose  of  the  policy,  by  will,  to  the 
exclusion  of  the  beneficiary,  when  he  has  paid  the  premiums  and  kept 
control  of  the  policy.35 

32  Walsh  v.  Mutual  L.  Ins.  Co.,  133  peal,  125  Pa.  St.  303  (1889);  Glanz 
N.  Y.  408,  31  N.  E.  228,  45  N.  Y.  St.  v.  Gloeckler,  104  111.  573,  44  Am. 
123,  21  Ins.  L.  J.  598  (1892);  United  Rep.  94  (1882);  Wilmaser  v.  Con- 
States  Trust  Co.  v.  Mutual,  etc.,  Ins.  tinental  L.  Ins.  Co.,  66  Iowa  417 
Co.,  115  N.  Y.  152,  21  N.  E.  1025  (1885);  Weston  v.  Richardson,  47 
(1889);  Continental,  etc.,  Ins.  Co.  v.  L.  T.  N.  S.  514;  Jackson  Bank  v. 
Webb.  54  Ala.  688  (1875).  Williams,  77  Miss.  398,  26  So.  965 

33Ricker  v.   Charter  Oak  L.   Ins.  (1899);   Lambert  v.  Penn,  etc.,  Ins. 

Co.,    27    Minn.    193,    6    N.    W.    771  Co.,    50    La.    Ann.    1027,    24    So.    16 

(1880);  Allis  v.  Ware,  28  Minn.  166  (1898).     Nature  of  beneficiary's  in- 

(1881);   City  Sav.  Bank  v.  Whittle,  terest:     See  Harley  v.  Heist,  86  Ind. 

63  N.  H.  587  (1885);  Boyden  v.  Mas-  196   (1882). 

sachusetts,  etc.,  Ins.  Co.,  153  Mass.        M  Central  Bank  v.   Hume,  128  U. 

544    (1891);   Lockwood  v.  Michigan,  S.  195  (1888). 

etc.,  Ins.  Co.,  108  Mich.  334,  66  N.        3B  Foster    v.    Gile,    50    Wis.    603, 

W.  229   (1896);   Ferdon  v.  Canfield,  Woodruff  Ins.  Gas.  371  (1880);  Berg 

104  N.  Y.  143    (1887);   Brown's  Ap-  v.  Damkoehler  (Wis.),  88  N.  W.  606 


§    354  LIFE,   ACCIDENT   AND   INDEMNITY    INSURANCE.  390 

In  many  states  there  are  statutes  which  protect  the  interests  of  mar- 
ried women  and  their  children  in  the  proceeds  of  life  insurance 
policies  upon  the  lives  of  their  husbands  as  against  the  claims  of 
creditors  of  the  husband.37  These  statutes  have  undoubtedly  had 
some  effect  in  inducing  the  courts  to  adopt  the  rule  above  stated, 
although  it  is  generally  accepted  without  reference  to  the  statutes.38 

This  rule  does  not  apply  to  certificates  issued  by  mutual  benefit 
associations,  and  beneficiaries  under  such  certificates  acquire  no  vested 
rights  in  the  same.39  "The  essential  difference  between  a  certificate 
of  membership  of  a  beneficiary  association  and  an  ordinary  life  policy 
is,  that  in  the  latter  the  rights  of  the  beneficiary  are  fixed  by  the 
terms  of  the  policy,  while  in  the  former  they  depend  upon  the  cer- 
tificate and  rights  of  the  member  under  the  constitution  and  by- 
laws of  the  society.  In  the  one  case  the  rights  of  the  beneficiary 
are  fixed  and  vested  from  the  moment  the  policy  takes  effect;  in 
the  other  they  are  subject  to  such  changes  as  the  law  of  the  association 
authorizes  the  society  and  the  member  to  make.  *  *  *  All  that 
the  beneficiary  has  during  the  life  of  the  member,  owing  to  his  right 
of  revocation,  is  a  mere  expectancy  depending  upon  the  will  and 
pleasure  of  the  holder  of  the  certificate.  This  expectancy  is  not  . 
property/'40 

(1902).  See  also,  Rison  v.  Wilker-  Hubbard  v.  Stapp,  32  111.  App.  541 
son,  3  Sneed  (Tenn.)  565  (1856);  (1889);  ^B3tna,  etc.,  Ins.  Co.  v.  Ma- 
Clark  v.  Durand,  12  Wis.  248  son,  14  R.  I.  583  (1885);  Central 
(1860);  Kerman  v.  Howard,  23  Wis.  Bank  v.  Hume,  128  U.  S.  195  (1888). 
108  (1868);  Gambsv.  Covenant,  etc.,  ^  Thomas  v.  Grand  Lodge,  12 
Ins.  Co.,  50  Mo.  44  (1872),  and  cases  Wash.  500,  41  Pac.  882.  (1895);  Rob- 
cited  in  preceding  notes.  inson  v.  United  States,  etc.,  Ass'n, 

37  For  consideration  of  these  stat-  68   Fed.   825    (1895);    Marsh  v.   Su- 
utes,  see  Eadie  v.  Slimmon,  26  N.  Y.  preme      Council,      149      Mass.      512 
9  (1862);  Troy  v.  Sargent,  132  Mass.  (1889);    Finch  v.   Grand   Grove,   60 
408   (1882);  Fraternal,  etc.,  Ins.  Co.  Minn.   308    (1895);    Martin  v.  Stub- 
v.  Applegate,  7  Ohio  St.  292  (1857);  bings,   126   111.  387    (1888);    Presby- 
Connecticut,   etc.,    Ins.    Co.   v.   Bur-  terian,  etc.,  Fund  v.  Allen,  106  Ind. 
roughs,    34    Conn.    305    (1867);    Me-  593     (1886);     Metropolitan    L.    Ins. 
Neil   v.   United   Order,   131   Pa.    St.  Co.  v.  O'Brien,  92  Mich.  584  (1892); 
339    (1890);   Wirgman  v.  Miller,  98  Sabin  v.  Phinney,  134  N.  Y.  423,  31 
Ky.  620,  33  S.  W.  937  (1896);  Smed-  N.  E.  1087   (1892). 

ley   v.    Felt,    43    Iowa    607    (1876);  *°  Masonic,  etc.,  Soc.  v.  Burkhart, 

Ionia  Co.  Saving  Bank  v.   McLean,  110    Ind.    189    (1886);    Schoenau   v. 

84  Mich.  625  (1891).  Grand  Lodge  (Minn.),  88  N.  W.  999 

38  New  York,  etc.,  Ins.  Co.  v.  Ire-  (1902). 
land    (Tex.),  17   S.  W.  617    (1891); 


391 


STIPULATIONS    OF   LIFE    INSURANCE    POLICY. 


355 


In  some  states  the  rule  that  the  beneficiary  may  dispose  of  the 
policy  does  not  apply  to  policies  taken  under  statutes  which  authorize 
a  policy  to  be  taken  out  by  the  husband  for  the  benefit  of  the  wife.41 
The  rule  was  established  in  New  York  under  the  original  statute 
which  made  policies  on  the  lives  of  husbands  payable  to  married 
women  free  from  claims  of  the  creditors  of  the  husbands,  but  under 
a  later  statute  the  wife  may  assign  such  a  policy  with  the  written 
consent  of  her  husband.42 

The  beneficiary  may  also  dispose  of  his  interest  in  the  policy  by 
pledge,43  mortgage,44  or  gift.45 

§  355.  Reservation  of  a  right  to  change  beneficiary. — The  con- 
tract may  reserve  to  the  insured  the  right  to  change  the  beneficiary 
at  will,  and  when  this  is  done  the  original  beneficiary  acquires  no 
vested  interest  in  the  policy  or  its  proceeds,  and  until  after  the  death 
of  the  insured  he  has  a  mere  expectancy.46  This  right  to  change  the 
beneficiary  may  be  reserved  in  the  policy,  certificate,  or  in  the  char- 
ter or  by-laws,  where  the  insurance  is  by  mutual  or  benefit  associa- 
tions. In  the  latter  case  the  right  may  be  conferred  by  an  amend- 


41  Smith     v.     Head,     75     Ga.     755 
(1885);   Godfrey  v.  Wilson,  70  Ind. 
50    (1880);    Eadie    v.    Slimmon,    26 
N.  Y.  9   (1862). 

42  Eadie   v.    Slimmon,    26   N.   Y.    9 
(1862);    Brick  v.   Campbell,   122  N. 
Y.  337  (1890).     See  N.  Y.  Laws  1879, 
ch.  248. 

43  Martin  v.  Stubbings,  126  111.  387 
(1888). 

44  Dungan  v.  Mutual,  etc.,  Ins.  Co., 
46  Md.  469  (1877). 

45  Madeira's  Appeal    (Pa.),   4  Atl. 
908  (1886).     A  beneficiary  who  mur- 
ders the  insured  can  not  recover  on 
the  policy.     In  Holdom  v.  Ancient 
Order,  etc.,  159  111.  619,  43  N.  E.  772 
(1896),  the  court  said:     "The  only 
question   of   law   presented   in   this 
record  is,  does  an  insane  beneficiary 
in  a  life  insurance  policy,  who  kills 
the    insured    under    such    circum- 
stances as  would  cause  the  killing 
to  be  murder  if  the  beneficiary  were 


sane,  thereby  forfeit  his  right  to 
recover  the  insurance  money?  This 
presents  a  question  of  first  impres- 
sion. *  *  *  ^he  causing  of  the 
death  of  the  insured  by  felonious 
means  by  a  sane  assignee  of  a  pol- 
icy of  life  insurance,  has  been  held 
sufficient  to  defeat  a  recovery  on 
the  policy:  New  York  Ins.  Co.  v. 
Armstrong,  117  U.  S.  591  (1886); 
Prince,  etc.,  Ass'n  v.  Palmer,  25 
Beav.  605  (1858).  We  hold:  where 
an  insane  beneficiary  in  a  life 
policy  kills  the  assured  under  such 
circumstances  as  would  cause  the 
killing  to  be  murder  if  the  bene- 
ficiary were  sane,  such  killing  does 
not  cause  a  forfeiture  of  the  policy 
nor  bar  his  right  of  recovery  for  the 
insurance  money." 

"Hopkins  v.  Northwestern  L. 
Assur.  Co.,  99  Fed.  199,  40  C.  C.  A. 
1  (1900);  Bilbro  v.  Jones,  102  Ga. 
161,  29  S.  E.  118  (1898). 


§    355  LIFE,   ACCIDENT   AND    INDEMNITY   INSURANCE.  392 

ment  to  the  by-laws,  which  by  its  terms  may  act  retroactively  on 
certificates  issued  before  such  amendment.47 

In  ordinary  life  policies  the  beneficiary  takes  a  vested  interest  the 
moment  the  policy  is  issued,  and  the  insured  can  not  change  the 
beneficiary  unless  the  express  power  to  do  so  is  reserved.  It  is 
equally  well  settled  that  when  the  right  to  change  the  beneficiary  is 
reserved,  in  either  the  ordinary  contract  or  a  benefit  certificate,  the 
beneficiary  named  acquires  no  vested  interest  until  the  death  of  the 
insured,  and  prior  to  that  time  the  insured  may  change  the  beneficiary 
at  will.48 

In  this  respect  there  is  a  material  difference  between  an  ordinary 
policy  of  life  insurance  and  a  benefit  certificate  issued  by  a  fraternal 
organization.  The  general  rule  is  that  the  power  to  change  the 
beneficiary  in  the  latter  case  is  vested  in  the  member  of  the  society, 
in  the  absence  of  any  restrictions  in  the  charter,  statute,  by-laws,  or 
certificate.  In  a  recent  case  in  Iowa,  Chief  Justice  Kinne  said:49 
"Appellant  contends  that  the  insured  in  the  case  at  bar  is  given  no 
authority  by  the  certificate,  by-laws  or  articles  of  incorporation  to 
change  the  beneficiary;  hence  the  beneficiary  named  in  the  cer- 
tificate had  a  vested  interest  in  it  the  moment  it  was  issued.  In 
other  words,  he  says  that  no  right  has  been  reserved  to  the  insured  in 
the  contract  or  laws  of  the  association  to  change  the  beneficiary; 
therefore,  none;  exists;  and  the  rights  of  the  beneficiary  would  be 
the  same,  as  to  the  assignment  of  the  policy,  as  in  the  case  of  an 
ordinary  life  polic}'.  Appellant's  conclusions  do  not  necessarily  fol- 
low, even  if  the  fact  be  as  he  claims.  It  is  true  that  the  rights  of 
the  assured  are  to  be  determined  from  the  contract,  and  the  con- 
tract embraces  the  certificate,  by-laws,  articles  of  incorporation,  stat- 

47  Catholic  Knights  v.  Franke,  137     Mente  v.  Townsend,  68  Ark.  391,  59 
111.   118    (1891);    Fugure  v.   Mutual     S.  W.  41  (1900). 

Society,  46  Vt.  360  (1874).    But  see  49  Carpenter   v.   Knapp,    101    Iowa 

Thibert  v.  Supreme  Lodge,  78  Minn.  712,  70  N.  W.  764,  38  L.  R.  A.  128 

448,  81  N.  W.  220   (1899);   Supreme  (1897)    [citing    Masonic,    etc.,    Soc. 

Commandery,  etc.,  v.  Ainsworth,  71  v.   Burkhart,   110   Ind.   189    (1886); 

Ala.  436   (1882);   Pellazzino  v.  Ger-  Presbyterian,    etc.,    Fund   v.    Allen, 

man,  etc.,  Soc.,  16  W.  L.  B.   (Ohio)  106    Ind.    593     (1886);     Thomas    v. 

27,  9  Dec.  R.   (Ohio)   635,  Woodruff  Grand  Lodge,  12  Wash.  500,  41  Pac. 

Ins.  Gas.  321  (1886).  882      (1895);      Hoeft     v.     Supreme 

48  Smith  v.  National  Ben.  Soc.,  123  Lodge,  113  Gal.  91,  33  L.  R.  A.  174 
N.   Y.   85,   9    L.   R.   A.    616    (1890);  (1896);    Voigt   v.   Kersten,    164    111. 
Hamilton    v.    Royal    Arcanum,    189  314  (1896);  Fischer  v.  American  L. 
Pa.    St.    273,    42    Atl.    186     (1899);  of  H.,  168  Pa.  St.  279  (1895)]. 


393 


STIPULATIONS    OF    LIFE    INSURANCE    POLICY. 


355 


ute  law,  if  any,  either  providing  expressly  for  a  change  of  beneficiaries 
or  prohibiting  such  change;  *  *  *  but  by  reason  of  the  char- 
acter and  purpose  of  such  associations,  it  should  be  held  that  the 
power  to  change  the  beneficiary  is  vested  in  the  member  insured 
during  his  lifetime." 

Where  the  insured  has  the  right  to  change  the  beneficiary,  it  is 
immaterial,  so  far  as  the  original  beneficiary  is  concerned,  that  he 
was  induced  to  make  the  change  by  fraud.50 


50Hoeft  v.  Supreme  Lodge,  113 
Cal.  91,  33  L.  R.  A.  174  (1896).  In 
this  case  the  court  said:  "Defend- 
ants do  not  plead  any  contract  with 
their  deceased  father,  or  any  special 
equities  which  would  deprive  him 
of  the  right  to  make  a  change,  but 
stand  upon  the  ground  that  they 
may  contest  because  the  change  was 
procured  by  fraud.  But,  if  it  was 
a  fraud,  did  they  have  a  right  to 
complain?  Clearly  they  had  not, 
unless  either  by  contract  or  in  law 
they  had  some  vested  interest  or 
right  in  the  certificate  which  had 
formerly  been  taken  out  in  their 
favor.  They  claim  no  such  vested 
interest  by  contract.  If  it  exists 
at  all  then,  it  exists  by  operation 
of  law.  But  such  rights  are  either 
constitutional  or  statutory,  and  we 
are  referred  to  no  law  which 
secures  to  them  a  right  of  action 
for  such  cause.  If  they  had  a 
vested  right  in  the  certificate  as 
such,  then  the  insured  himself,  of 
his  own  volition,  and  without  the 
fraudulent  contrivance  of  a  third 
person,  could  not  substitute  a  new 
beneficiary.  But  this  is  not  and  can 
not  be  claimed,  for  the  contract  is 
between  the  order  and  the  insured. 
The  beneficiary's  interest  is  the 
mere  expectancy  of  an  incompleted 
gift,  which  is  revocable  at  the  will 
of  the  insured,  and  which  does  not 
and  can  not  become  vested  as  a 


right  until  fixed  by  his  death.  If 
it  is  said  that  a  devisee  under  a 
will  has,  during  the  life  of  the  tes- 
tator, a  like  naked  expectancy,  it 
may  be  freely  conceded  that  it  is 
so;  but  to  the  heirs  and  devisees  is 
confirmed  a  right  of  action  for 
fraud,  etc.,  by  the  provisions  of  the 
Code.  Otherwise,  they,  too,  would 
come  within  the  scope  of  the  gen- 
eral principle  that  a  right  of  action 
for  fraud  is  personal  and  untrans- 
ferable. One  can  not  be  defrauded 
of  that  in  which  he  has  no  vested 
right.  A  vested  right  is  property, 
which  the  law  protects,  while  a 
mere  expectancy  is  not  property, 
and  therefore  is  not  protected. 
These  views  will  be  found  sup- 
ported without  conflict  by  a  multi- 
tude of  authorities,  from  which 
may  be  cited:  Niblack  Vol.  Soc.  & 
Mut.  Ben.  Ins.  (2d  ed.),  §  234a; 
Brown  v.  Grand  Lodge,  80  Iowa  287 
(1890);  Schillinger  v.  Boes,  85  Ky. 
357  (1887);  Robinson  v.  United 
States,  etc.,  Ass'n,  68  Fed.  825 
(1895);  Supreme  Conclave  v.  Cap- 
pella,  41  Fed.  1  (1890);  Lament  v. 
Grand  Lodge,  31  Fed.  177  (1887); 
Knights  of  Honor  v.  Watson,  64  N. 
H.  517  (1888);  Beatty's  Appeal,  122 
Pa.  St.  428  (1888);  Martin  v.  Stub- 
bings,  126  111.  387  (1888).  In  our 
own  state  the  cases  of  Swift  v.  San 
Francisco  Stock,  etc.,  Board,  67  Cal. 
567  (1885);  Order  of  Mutual  Com- 


§    356  LIFE,    ACCIDENT   AND   INDEMNITY    INSURANCE.  394 

§  356.  Manner  of  changing  beneficiary. — A  change  in  the  bene- 
ficiary in  a  mutual  benefit  certificate  must  be  made  in  the  manner 
provided  by  the  rules  of  the  society,  and  any  material  departure 
therefrom  will  invalidate  the  transaction.51  To  this  rule  there  are 
several  exceptions:52 

(1)  If  the  society  has  waived  a  strict  compliance  with  its  rules, 
and,  in  pursuance  of  a  request  of  the  insured  to  change  his  beneficiary, 
has  issued  a  new  certificate  to  him,  the  original  beneficiary  will  not 
be  heard  to  complain  that  the  course  indicated  by  the  regulations 
was  not  pursued.53 

(2)  If  it  is  beyond  the  power  of  the  insured  to  comply  literally 
with  the  regulations,   a  court   of  equity  will  treat  the  change  as 
having  been  made. 

(3)  If  the  insured  has  pursued  the  course  pointed  out  by  the 
laws  of  the  association  and  has  done  all  in  his  power  to  change  the 
beneficiary,  but  before  a  new  certificate  is  actually  issued  he  dies,  a 
court  of  equity  will  decree  that  to  be  done  which  ought  to  be  done, 
and  act  as  though  the  certificate  had  in  fact  been  issued.54 

A  change  of  beneficiaries  may  be  made  by  will  in  which  the  pro- 
ceeds of  the  certificate  are  bequeathed  to  a  certain  person  named.. 
Where  this  was  done  the  court  said  that,  "in  case  the  certificate  is 
destroyed  without  fraud  of  the  insured,  so  that  it  is  impossible  to 

panions  v.  Griest,  76  Cal.  494  101  Pa.  St.  Ill  (1882);  Duvall  v. 

(1888);  Bowman  v.  Moore,  87  Cal.  Goodson,  79  Ky.  224  (1880);  Pres- 

306  (1890),  and  McLaughlin  v.  Me-  byterian,  etc.,  Fund  v.  Allen,  106 

Laughlin,  104  Cal.  171  (1894),  rec-  Ind.  593  (1886);  Supreme  Council 

ognize  the  same  general  principles,  v.  Perry,  140  Mass.  580  (1886); 

Jory  v.  Supreme  Council,  105  Cal.  Martin  v.  Stubbings,  126  111.  387 

20,  26  L.  R.  A.  733  (1894),  and  cases  (1888);  Wendt  v.  Iowa  L.  of  H.,  72 

involving  a  like  consideration,  dif-  Iowa  682  (1887);  Holland  v.  Taylor, 

fer  radically  from  the  case  at  bar."  Ill  Ind.  121  (1887).  As  to  waiver 

51  Berg  v.  Damkoehler  (Wis.),  88  by  insurer,  see  Schoenau  v.  Grand 

N.  W.  606  (1902);  Milner  v.  Bow-  Lodge  (Minn.),  88  N.  W.  999  (1902). 
man,  119  Ind.  448,  5  L.  R.  A.  95  M  Heydorf  v.  Conrack,  7  Kan. 

(1889),  annotated;  Duvall  v.  Good-  App.  202,  52  Pac.  700  (1898);  Jinks 

son,  79  Ky.  224  (1880);  Masonic,  v.  Banner  Lodge,  139  Pa.  St.  414 

etc.,  Soc.  v.  Burkhart,  110  Ind.  189  (1890);  Hirschl  v.  Clark,  81  Iowa 

(1886);  National,  etc.,  Soc.  v.  Lu-  200,  9  L.  R.  A.  841  (1890);  Schmidt 

pold,  101  Pa.  St.  Ill  (1882),  and  v.  Iowa,  etc.,  Ass'n,  82  Iowa  304,  11 

cases  there  cited.  L.  R.  A.  205  (1891).  See  further, 

82  Supreme  Conclave  v.  Cappella,  cases  collected  in  note  to  Grand 

41  Fed.  1,  Woodruff  Ins.  Gas.  381  Lodge  v.  Noll,  90  Mich.  37,  51  N.  W. 

(1890).  268,  15  L.  R.  A.  350  (1892). 

53  National,    etc.,    Soc.    v.    Lupold, 


395  STIPULATIONS   OF    LIFE   INSURANCE   POLICY.  §    357 

exercise  the  right  of  naming  a  new  beneficiary  in  accordance  with 
the  methods  prescribed  by  the  by-laws  of  the  corporation,  a  court 
of  equity  will  recognize  a  designation  of  the  beneficiary  by  any  other 
method  which  may  manifest  his  intention  to  exercise  the  right  which 
he  unquestionably  possessed,  of  changing  the  beneficiary."55 

§  357.  Eight  to  proceeds — Bankruptcy. — The  present  bankruptcy 
law  provides  that  where  the  bankrupt  has  an  insurance  policy  which 
has  a  cash  surrender  value  payable  to  himself,  his  estate,  or  legal 
representatives,  he  may,  within  thirty  days  after  such  surrender 
value  has  been  ascertained,  pay  the  amount  thereof  to  the  trustee, 
and  keep  the  policy  free  from  all  claims  of  creditors.  If  he  does 
not  do  this  the  policy  passes  to  the  trustee  as  assets  for  the  benefit 
of  his  creditors.  If  the  policy  has  no  surrender  value  the  trustee 
has  no  interest  therein,  and  it  is  immaterial  that  the  bankrupt  has 
within  four  months  prior  to  the  filing  of  the  petition  in  bankruptcy 
assigned  such  policy  to  his  wife.56 

//.     Payment  of  Premium  a  Condition  Precedent. 

This  policy  does  not  take  effect  until  the  first  premium  shall  have 
been  actually  paid  during  the  lifetime  of  the  insured.  In  case  the 
said  premium  shall  not  be  paid  on  or  before  the  several  days  herein- 
before mentioned  for  the  payment  thereof,  at  the  office  of  the  com- 
pany in  the  city  of  —  — ,  or  to  agents  when  they  produce  receipts. 

65  Grand  Lodge  v.  Noll,  90  Mich,  to    his   estate:     See   Re   Lange,    91 

37,   51  N.  W.   268,   15  L.  R.  A.  350  Fed.  361   (1899).     Policy  payable  to 

(1892);    Grand   Lodge  v.   Child,   70  the  insured  if  living,  otherwise  to 

Mich.  163,  38  N.  W.  1  (1888).  his  wife  or  children:  Re  Boardman, 

88  Morris  v.  Dodd,  110  Ga.  606,  50  103  Fed.  783  (1900);  Re  Diack,  100 

L.  R.  A.  33    (1900),  with  complete  Fed.  770  (1900);  Bassett  v.  Parsons, 

collection  of  cases  in  note.    "A  policy  140  Mass.  169,  3  N.  E.  547'  (1885). 

of  insurance  on  the  life  of  a  bank-  As  to  the  rights  of  creditors  when 

rupt  which  has  no  cash  surrender  the    policy   is   taken   by   a    solvent 

value,   and   no  value   for  any   pur-  creditor   and   made   payable   to   his 

pose  except  the  contingency  of  its  wife,  see  Central  Bank  v.  Hume,  128 

being  valuable  at  the  death  of  the  U.  S.  195  (1888).    See  review  of  this 

bankrupt  if  the  premiums  are  kept  case  by  Prof.  Williston  in  25  Am. 

paid,   does  not  vest  in  the  trustee  Law  Rev.  185  (1891),  where  the  au- 

as  assets  of  the  estate : "    Re  Buelow,  thorities  are  cited.    See,  also,  Pullis 

98  Fed.  86    (1899).     Policy  payable  v.  Robison,  73  Mo.  201  (1880). 
to  the  insured  if  living,  otherwise 


§    358  LIFE,    ACCIDENT   AND   INDEMNITY   INSUEANCE.  396 

signed  by  the  president  or  treasurer,  then.,  and  in  every  such  case, 
this  policy  shall  cease  and  determine,  subject  to  the  provisions  of 
the  company's  non- forfeiture  system  as  indorsed  hereon,  witli  ac- 
companying table. 

§  358.  Payment  of  premium — Illustrations. — Where  an  insurance 
company  delivers  a  policy  which  on  its  face  acknowledges  the  receipt 
of  the  first  premium,  it  is  estopped  thereafter  to  assert  that  the  pre- 
mium was  not  in  fact  paid.57  The  policy  under  consideration  pro- 
vides that  it  shall  not  take  effect  until  the  first  premium  shall  have 
been  actually  paid  during  the  lifetime  of  the  insured.  Its  legal 
effect  dates  from  the  time  of  payment  of  the  first  premium.,  and  not 
from  the  date  it  bears.58  But  it  becomes  a  binding  contract  where 
the  agent  accepts  the  note  of  the  insured  in  pursuance  of  a  prac- 
tice which  is  known  to  the  company.59  Thus,  where  it  appeared  that 
upon  the  issuance  and  delivery  of  a  policy  a  note  was  executed  and 
delivered  by  the  insured  to  the  general  agent  of  the  company  for  the 
first  premium,  and  the  policy  was  found  among  the  effects  of  the 
insured  at  the  time  of  his  death,  it  was  held  that  the  presumption 
was  that  the  policy  was  delivered  at  the  time  it  bore  date,  and  that 
the  difference  between  the  face  of  the  note  and  the  amount  of  the 
premium  was  paid  in  cash  or  arranged  for  by  the  insured.  The  giv- 
ing and  delivery  of  the  note  and  the  receiving  of  the  policy  were 
treated  as  pajonent  of  the  first  annual  premium.60 

But  the  burden  of  proof  is  upon  the  party  who  asserts. that  a  note 
was  accepted  as  payment  of  the  first  premium.  Where  the  defense 
was  that  the  first  premium  was  not  paid,  nor  payment  thereof  waived, 

57  Dobyns  v.  Bay  State,  etc.,  Ass'n,  mers  v.  Fidelity,  etc.,  Ass'n,  84  Mo. 

144   Mo.  95,  45   S.  W.   1107    (1898).  App.  605  (1900).     See  §  129,  supra. 

As  to  liability  on  a  receipt  for  the  M  Methvin  v.  Fidelity,  etc.,  Ass'n, 

first  premium  which  states  that  the  129  Cal.  251,  61  Pac.  1112  (1899). 

applicant  is  to  be  insured  from  date  59  Porter  v.  Mutual  L.  Ins.  Co.,  70 

of  the  receipt,  where  the  applicant  Vt.  504,  41  Atl.  970   (1898).     As  to 

dies  before  the  policy  is  delivered,  what   is   payment,    see    Mallette   v. 

see  Lee  v.  Union,  etc.,  Ins.  Co.,  19  British  Am.  Assur.  Co.,  91  Md.  471, 

Ky.  L.  608,  41  S.  W.  319  (1897).    As  46    Atl.    1005     (1900);     Baldwin    v. 

to  effect  of  acceptance  of  premium  Provident,  etc.,  Soc.,  162  N.  Y.  636, 

where   policy   contains  a  provision  57  N.  E.  1103  (1900). 

that  there  is  no  liability  unless  the  «°  Thum  v.  Wolstenholme,  21  Utah 

policy    has    been    in    force    twelve  446,  61  Pac.  537  (1900). 
months  prior  to  the  death,  see  Sum- 


397  STIPULATIONS    OF   LIFE   INSURANCE   POLICY.  §    358 

and  that  the  policy  never  went  into  effect,  it  was  held  that  there 
could  be  no  recovery,  although  the  evidence  showed  that  the  applica- 
tion was  accompanied  by  the  applicant's  ten-day  note  for  the  amount 
of  the  first  premium,  together  with  a  memorandum  indorsed  on  the 
note  that  it  was  to  be  returned  if  not  accepted;  that  the  application 
and  the  policy  both  provided  that  the  insurance  should  not  become 
binding  until  the  first  premium  was  actually  paid,  but  that  the  risk 
was  accepted  by  a  general  agent  having  power  to  bind  the  company 
by  a  waiver  of  this  provision;  that  the  agent,  upon  receiving  the 
policy  and  the  customary  voucher  or  receipt,  tendered  them  to  the 
applicant  and  demanded  payment  of  the  note;  that  the  maker  ex- 
cused the  non-payment,  and  the  agent  delivered  the  policy  to  him, 
but  retained  the  voucher  and  note;  that  the  agent  then  left  the  note 
with  the  voucher  in  a  bank  for  collection,  with  instructions  that  the 
voucher  be  delivered  upon  the k  payment  of  the  note ;  that  at  the 
maker's  request  the  time  for  the  payment  of  the  note  was  extended, 
such  extension  being  made,  however,  as  an  extension  of  the  time 
for  the  payment  of  the  premium ;  and  that  the  applicant  died  without 
paying  the  note.  Evidence  that  the  note  was  taken  to  "tie  up"  the  in- 
sured does  not  show  or  even  tend  to  show  that  the  obligation  to  pay 
should  be  deemed  an  actual  payment.  After  stating  the  rule  that  the 
general  agent  of  an  insurance  company  has  authority  at  the  time  of  the 
delivery  of  an  insurance  policy  to  bind  his  principal  by  an  agreement 
waiving  a  provision  of  the  policy  calling  for  the  actual  payment  of 
the  first  premium,  the  court  said:61  "It  is  also  conceded  that  a  con- 
dition of  the  policy  as  to  its  not  going  into  effect  in  advance  of  the 
actual  payment  of  the  first  premium  is  fatal  to  the  plaintiff's  right  to 
recover  unless  it  was  waived  by  the  insurer  through  its  agent,  and 
that  whether  there  was  such  waiver  depends  upon  whether  [the  par- 
ties] expressly  agreed  that  the  former's  note,  given  with  his  applica- 
tion for  insurance,  should  operate  as  such  payment." 

This  provision  may  of  course  be  waived  by  the  company  or  its 
duly  authorized  agent.62  Thus,  where  the  agent  gave  the  policy 
to  the  insured,  although  he  stated  that  he  could  not  pay  for  it  at 
the  time,  it  was  held  that  the*  company  was  liable  on  the  policy  where 
the  death  of  the  insured  occurred  but  two  months  after  such  de- 

81  McDonald     v.     Provident,     etc.,        ^  See  note  to  Griffith  v.  New  York, 
Assur.  Soc.,  108  Wis.  213,  84  N.  W.     etc.,  Ins.  Co.,  40  Am.  St.  105. 
154,   81  Am.   St.   885    (1900),   anno- 
tated. 


§    358  LIFE,   ACCIDENT    AND   INDEMNITY    INSURANCE.  398 

livery.63  But  where  the  policy  provided  that  it  should  not  go  into 
effect  until  the  first  premium  had  been  actually  received  by  the 
company  or  its  authorized  agent  during  the  good  health  of  the  appli- 
cant, and  further  that  no  agent  of  the  company  had  power  to  make, 
alter,  or  discharge  contracts,  or  grant  credit,  and  that  no  alteration  of 
the  terms  of  the  contract  should  be  valid  unless  in  writing  and  signed 
by  the  president  of  the  association,  it  was  held  that  an  agent  of  the 
company  could  not  waive  payment  of  the  premium  during  the  good 
health  of  the  insured,  as  this  was  a  condition  precedent  to  the  liability 
of  the  association.64 

Where  the  company  retains  a  note  for  the  unearned  premiums 
after  its  maturity  and  sends  it  to  an  attorney  for  collection,  it  waives 
the  forfeiture  provided  for  in  the  policy  for  failure  to  pay  such  note 
at  maturity.65  But  where  the  policy  exempts  the  company  from 
liability  while  a  premium  note  remains  past  due  and  unpaid,  it  is  not 
revived  by  a  confession  of  judgment  on  the  note.60 

If  the  company  accepts  a  note  for  the  first  annual  premium,  and 
delivers  the  policy,  it  is  a  payment  of  the  premium,  although  the 
note  is  never  paid.67  Thus,  where  the  policy  provided  that  it  should 
not  take  effect  until  the  first  premium  had  been  actually  paid  during 
the  lifetime  and  good  health  of  the  insured,  and  that  agents  could 
not  alter  or  discharge  a  contract,  or  receive  for  premiums  anything 
but  cash,  and  the  local  agent  accepted  a  note  for  the  premium  which 
was  unpaid  at  the  death  of  the  insured,  and  it  appeared  that  the 
general  agent  of  the  company  for  several  years  prior  to  the  time  of 
the  issuing1  of  the  policy  had  permitted  such  local  agents  to  accept 

63  Berliner  v.   Travelers'   Ins.   Co.,  Ill  Ga.  482,  865,  36  S.  E.  637,  944 

121    Cal.    451,    53    Pac.    922    (1898).  (1900). 

See,   also,   as   to   waiver,   Haupt  v.  m  Union    Cent.,    etc.,    Ins.    Co.    v. 

Phoenix,  etc.,  Ins.  Co.,  110  Ga.  146,  Moreland     (Ky.),     56     S.     W.     653 

35   S.  B.   342    (1900);    Sick  v.   Cov-  (1900). 

enant,  etc.,  Ins.  Co.,  79  Mo.  App.  609  «•  Proebstel   v.   State   Ins.   Co.,   14 

(1899);    Griffin    v.    Prudential    Ins.  Wash.  669,  45  Pac.  308   (1896).     As 

Co.,    43    App.     Div.     (N.    Y.)     499  to  construction  of  forfeiture  clause 

(1899);   New  York,  etc.,  Ins.  Co.  v.  in  a  premium  note,  see  Union,  etc., 

Scott,  23  Tex.  Civ.  App.  541,  57  S.  Ins.  Co.  v.  Buxer,  62  Ohio  St  385, 

W.    677     (1900).      As    to    effect    of  57  N.  B.  66  (1900).     See  §  130,  supra, 

agreement  of  agent  to  change  date  "  Stewart  v.  Union,  etc.,  Ins.  Co., 

of  premium  payment,  see  Mutual  L.  155  N.  Y.  257,  49  N.  B.  876   (1897); 

Ins.  Co.  v.  Clancy,  111  Ga.  865,  36  Thum    v.    Wolstenholme,    21    Utah 

S.  E.  944  (1900).  446,  61  Pac.  537  (1900). 

M  Reese    v.    Fidelity,    etc.,    Ass'n, 


399  STIPULATIONS    OF    LIFE    INSURANCE    POLICY.  §    359 

notes  for  premiums,  and  that  the  insured  had  previously  taken  out 
like  policies  in  the  same  company  through  the  same  agent  and  given 
notes  for  premiums,  which  were  collected  by  the  general  agent,  it 
was  held  that  the  local  agent  had  authority  to  waive  the  provision 
which  required  the  payment  of  the  premium  in  cash.68 

The  burden  is  on  the  party  claiming  under  the  policy  to  show 
that  the  first  premium  has  in  fact  been  paid,  or  the  payment  waived, 
and  it  is  not  sufficient  for  him  to  show  the  execution  of  a  note  for 
the  amount,  which  recites  that  it  is  accepted  on  condition  that  if  not 
paid  at  maturity,  the  policy  shall  be  void.69 

Payment  to  an  agent  is  sufficient  under  a  policy  which  provides 
that  if  payment  is  not  made  into  the  home  office  within  thirty  days 
after  the  date  of  the  policy,  it  shall  be  void  and  of  no  effect.70  It 
was  held  in  North  Carolina  that  the  time  of  mailing  a  check  for  the 
premium  on  an  insurance  policy  is  the  time  of  payment,71  although 
it  does  not  reach  the  company  until  past  due.72  So,  the  placing  of 
a  policy  of  life  insurance  in  the  mail  with  postage  prepaid,  so  that 
it  would  in  due  course  reach  the  insured  before  he  was  taken  sick, 
is  a  delivery  of  the  policy  within  the  meaning  of  a  provision  to  the 
effect  that  it  shall  not  be  in  force  until  "the  payment  in  cash  of  the 
first  premium  and  the  delivery  of  the  policy  to  the  applicant  during 
his  life  and  in  good  health."73 

Under  the  New  York  statute  it  was  held  that  notice  of  the  maturing 
of  a  premium,  properly  mailed  as  required,  which  never  reached 
the  insured,  did  not  prevent  a  forfeiture  of  the  policy  for  non- 
payment of  the  premium  when  it  was  due.74 

§  359.  Time  when  premium  is  due — Construction  by  agent — Es- 
toppel.— In  a  recent  case  the  supreme  court  considered  the  question 
of  the  power  of  an  agent  to  waive  the  condition  of  the  policy  with 

68  Provident,   etc.,    Soc.   v.    Oliver,  72  Hollowell   v.   Life   Ins.   Co.,  126 
22  Tex.   Civ.  App.  8,  53   S.  W.  594  N.  C.  398,  35  S.  E.  616  (1900). 
(1899).  "Mutual,   etc.,   Ass'n   v.   Farmer, 

69  Manhattan,  etc.,  Ins.  Co.  v.  My-  65  Ark.  581,  47  S.  W.  850  (1898). 
ers,    22    Ky.    L.    875,    59    S.    W.    30  '     7t  McConnell     v.     Provident,     etc., 
(1900).  Ass'n,  92  Fed.  769  (1899).    See  §  129, 

70  Pulaski,  etc.,  Ins.  Co.  v.  Dawson,  supra.    As   to   construction    of   the 
87  111.  App.  514  (1900).  New  York  statute  requiring  notice 

71  Kendrick    v.    Mutual,    etc.,    Ins.  of  maturity  of  premium,  see  article 
Co.,    124   N.   C.    315,    32    S.    E.    728  by  Robert  J.  Brennen  in  52  Cent. 
(1898).  L.  J.  4. 


§    359  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  400 

reference  to  the  payment  of  the  premium,  and  the  duty  of  the  insured 
to  read  the  policy.  An  application  was  made  on  December  12,  and 
the  policy  was  dated  December  18.  The  premium  was  paid  and  the 
policy  delivered  on  December  26,  1893,  and  the  agent  stated  to  the 
insured  that  under  certain  provisions  the  policy  would  be  in  force 
for  thirteen  months  from  the  time  of  the  payment  of  the  first  pre- 
mium. By  the  terms  of  the  policy  the  next  premium  was  payable 
on  December  12,  1894,  with  thirty  days'  grace,  making  January  12, 
1895,  the  last  day  for  payment.  The  insured  died  January  18,  1895, 
having  paid  but  the  one  premium.  It  appeared  that  the  insured 
had  the  policy  in  his  possession  after  its  delivery,  and  the  company 
claimed  that  his  representatives  were  estopped  from  denying  that 
the  date  of  the  contract  was  not  that  which  appeared  on  the  face  of 
the  policy,  or  that  the  words,  "Please  date  policy  same  as  applica- 
tion," were  not  in  the  application  when  it  was  signed  by  the  insured, 
and  that  by  accepting  the  policy  the  insured  waived  his  right  to  object 
if  the  words  were  inserted  as  alleged,  after  the  signing  of  the  appli- 
cation. The  policy  on  its  face  expressly  required  payment  of  the 
premium  on  December  12  of  each  year. 

Chief  Justice  Fuller  said:75     "The  insured  was  justified  in  assum- 

76  McMaster  v.  New  York  L.   Ins.  surance  on  his  life.    He  was  in  fact 

Co.   (U.  S.),  22  Sup.  Ct.  10   (1901).  a    member    of    several    co-operative 

For     the     earlier     course     of     this  associations,  and  therefore  did  have 

litigation,    see    McMaster    v.    New  other  insurance;   but  the  soliciting 

York,    etc.,    Ins.    Co.,    78    Fed.    33  agent  of  the  company,  to  whom  he 

(1897);   New  York,  etc.,  Ins.  Co.  v.  stated  the  facts,  believing  that  in- 

McMaster,   87  Fed   63,   30   C.   C.  A.  surance   of   that  kind   was  not   in- 

532    (1898);    Central    Trust   Co.    v.  surance  within  the  meaning  of  the 

Continental  Trust  Co.,  171  U.  S.  687  question,    wrote   'No   other'   as   the 

(1898);  McMaster  v.  New  York,  etc.,  proper   answer,    at   the    same   time 

Ins.  Co.,  90  Fed.  40   (1898).     As  to  assuring  the  applicant  that  it  was 

the     construction     of     contract    by  such.    And  this  court  held  that  the 

agent,   the   court  said:      "In   Conti-  company  was  bound   by  the   inter- 

nental  L.  Ins.  Co.  v.  Chamberlain,  pretation  put  upon  the  question  by 

132  U.  S.  304,  33  L.  ed.  341,  10  Sup.  its    soliciting   agent.      When,    then, 

Ct.  87  (1889),  it  was  decided  that  a  McMaster  signed  these  applications 

person  procuring  an  application  for  he  understood,  and  the  company  by 

life  insurance   in   Iowa  became   by  its    agent   understood,    that    if   the 

force     of    the     statute     the     agent  risks  were  accepted  at  the  home  of- 

of   the   company   in   so   doing,   and  fice  he  would,  by  paying  one  year's 

could    not    be    converted    into    the  premium   in   full,    obtain   contracts 

agent  of  the  assured  by  any  provi-  of  insurance  which  could  not  be  for- 

sion    in    the    application.      In    that  felted  until  after  the  expiration  of 

case  the  applicant  was  required  to  thirteen  months." 
state  whether  he  had  any  other  in- 


401  STIPULATIONS    OF   LIFE   INSURANCE    POLICY.  §    360 

ing,  and  on  the  findings  must  be  held  to  have  assumed,  that  if  he 
paid  the  first  annual  premium  in  full  he  would  be  entitled  to  one 
year's  protection,  and  to  one  month  of  grace  in  addition — that  is, 
to  thirteen  months'  immunity  from  forfeiture.  And  the  findings 
show  that  the  company,  by  its  agent,  gave  that  meaning  to  the  clause, 
and  that  McMaster  was  induced  to  apply  for  the  insurance  by  reason 
of  the  protection  he  supposed  would  be  thus  obtained.  Bearing  in 
mind  that  McMaster  had  made  no  request  of  the  company  in  respect 
of  antedating  the  policies,  and  was  ignorant  of  the  interpolation  of 
the  agent,  and  ignorant  in  fact,  and  not  informed  or  notified  in  any 
way,  of  the  insertion  of  December  12  as  the  date  for  subsequent  pay- 
ments, he  had  the  right  to  suppose  that  the  policies  accorded  with 
the  applications  as  they  had  left  his  hands,  and  that  they  secured 
to  him,  on  payment  of  the  first  annual  premiums  in  advance,  im- 
munity from  forfeiture  for  thirteen  months.  And  the  agent  as- 
sured him  that  this  was  so. 

"The  situation  being  thus,  we  are  unable  to  concur  in  the  view 
that  McMaster's  omission  to  read  the  policies  when  delivered  to  him 
and  the  payment  of  the  premiums  made,  constituted  such  negligence 
as  to  estop  the  plaintiff  from  denying  that  McMaster,  by  accepting 
the  policies,  agreed  that  the  insurance  might  be  forfeited  within 
thirteen  months  from  December  12,  1893."76 

///.     Powers  of  Agent. 

Nor  are  agents  authorized  to  make,  alter.,  or  discharge  this  or  any 
other  contract  in  relation  to  the  matter  of  this  insurance,  or  to  waive 
any  forfeiture  hereof,  or  to  grant  permits. 

§  360.  Agents. — The  effect  of  this  provision  in  a  policy  has  been 
already  considered.  It  was  recently  held  in  Missouri  that  an  agent 
of  a  life  insurance  company  may  waive  a  forfeiture  for  non-payment 
of  the  premium,  although  the  policy  provided  that  there  could  only 
be  a  waiver  of  forfeiture  for  a  breach  of  conditions  in  writing,  signed 

78  Citing  Supreme  Lodge  v.  With-  Iowa    276,    72    N.    W.    530    (1897); 

ers,  177  U.  S.  260,  44  L.  ed.  762,  20  Hartford   Steam  Boiler,  etc.,  Co.  v. 

Sup.  Ct.  611  (1900),  and  cases  cited;  Cartier,  89  Mich.  41,  50  N.  W.  747 

Fitchner  v.  Fidelity,  etc.,  Ass'n,  103  (1891). 

26 — ELLIOTT  INS. 


§    361  LIFE,   ACCIDENT    AND   INDEMNITY   INSURANCE.  402 

by  the  president  or  vice-president  and  one  of  the  other  officers  of 
the  company,  where  the  receipts  which  were  given  by  an  agent  pro- 
vided on  their  face  that  they  should  not  be  valid  unless  countersigned 
by  the  agent.77 

Where  a  company  whose  general  manager  is  also  a  director  re- 
ceives proofs  of  loss  which  show  that  the  condition  of  the  policy  as 
to  residence  of  the  insured  has  been  violated,  and  returns  the  proofs 
for  minor  corrections  without  claiming  a  forfeiture  on  account  of 
such  violation,  the  company  is  estopped  from  claiming  a  forfeiture 
on  account  thereof.78  So,  where  a  general  agent  modified  a  condi- 
tion of  the  application  for  insurance,  and  the  policy  subsequently 
issued  required  full  prepayment  of  the  premium,  by  accepting  a  por- 
tion of  the  premium  and  giving  sixty  days'  credit  for  the  balance, 
in  violation  of  the  terms  of  the  policy,  it  was  held  that  the  company 
was  estopped  to  assert  the  invalidity  of  the  contract,  notwithstanding 
the  fact  that  the  policy  which  was  issued  contained  a  provision  pro- 
hibiting the  modification  of  its  terms  other  than  by  a  written  agree- 
ment signed  by  its  president  or  secretary.  This  condition  appeared 
in  the  policy,  but  the  insured  was  not  informed  of  the  fact  that  it 
would  be  in  the  policy  when  he  made  the  application.79 

IV.     Statement  of  Age. 

Any  error  made  in  understating  the  age  of  the  insured  will  be 
adjusted  by  paying  such  amount  as  the  premiums  paid  would  pur- 
chase at  the  table  rate. 

§  361.  Age. — This  liberal  provision  of  the  policy  relieves  the  in- 
sured from  a  forfeiture  which  would  otherwise  result  from  a  mis- 
statement  of  his  age.  In  its  absence,  the  understatement  of  his  age 
by  an  applicant  for  life  insurance  increases  the  risk  as  a  matter  of 
law.80  Thus,  it  was  held  that  a  statement  by  an  applicant  that  his 
age  was  fifty-nine,  when  in  fact  it  was  sixty-four,  avoided  the  pol- 
icy.81 A  statement  that  the  age  of  the  applicant  is  thirty,  when  in 

77  James  v.  Mutual,  etc.,  Ass'n,  148  Wash.   26,   60  Pac.   68,  47  L.  R.  A. 

Mo.  1,  49  S.  W.  978  (1898).  201   (1900). 

"Kidder    v.    Knights    Templars,  ""Dolan  v.  Mutual,  etc.,  Ass'n,  173 

etc.,  Co.,  94  Wis.  538,  69  N.  W.  364  Mass.  197,  53  N.  E.  398  (1899). 

(1896).  81Swett  v.  Citizens',  etc.,  Soc.,  78 

"Cole  v.  Union,  etc.,  Ins.  Co.,  22  Me.  541   (1886). 


403  STIPULATIONS    OF    LIFE    INSURANCE   POLICY.  §    362 

fact  it  is  thirty-five,  is  a  material  variation.82  A  misrepresentation 
by  a  member  of  a  benefit  society  as  to  his  age  invalidates  the  insur- 
ance contract,  although  the  applicant  entered  the  society  before  its 
constitution  and  regulations  as  to  age  were  finally  adopted.83 

But  where  the  applicant  states  his  age  "to  the  best  of  his  knowl- 
edge and  belief,"  and  stipulates  that  any  untrue  or  fraudulent  state- 
ment will  forfeit  his  right  to  recovery,  the  contract  is  not  invalidated 
by  the  fact  that  he  was  three  or  four  years  older  than  he  stated  unless 
there  is  evidence  of  fraud  or  knowledge  on  his  part  that  his  state- 
ment was  untrue.8* 

V.     Assignment  of  Policy.  x 

No  assignment  of  this  policy  shall  take  effect  until  written  notice 
thereof  shall  be  given  to  the  company. 

§  362.  Assignability.  —  The  ordinary  fire  insurance  contract,  being 
of  a  personal  nature,  is  not  assignable  without  the  consent  of  the  in- 
surer, but  a  life  insurance  contract,  being  in  the  nature  of  a  chose 
in  action,  is  assignable  in  the  absence  of  restrictive  provisions.  The 
accepted  rule  is  that  a  policy  of  life  insurance  without  restrictive 
words  is  assignable  by  the  assured  for  a  valuable  consideration  like 
any  other  chose  in  action  where  the  assignment  is  rot  made  to  cover 
a  mere  speculative  risk  and  thus  evade  the  law  against  wager  pol- 
icies.85 Payment  of  a  policy  thus  assigned  may  be  enforced  by  or 
for  the  benefit  of  the  assignee. 


L.  Ins.  Co.  v.  France,  91  v.  Bushnell,  92  Ind.  503  (1883); 

U.  S.  510  (1875).  New  York,  etc.,  Ins.  Co.  v.  Flack,  3 

""Marcoux  v.  Society,  etc.,  91  Me.  Md.  341,  56  Am.  Dec.  742  (1852); 

250,  39  Atl.  1027  (1898).  Hewlett  v.  Home,  etc.,  74  Md.  350, 

MEgan  v.  Supreme  Council,  32  17  L.  R.  A.  447  (1892);  Bursinger  v. 

App.  Div.  (N.  Y.)  245,  161  N.  Y.  650,  Bank,  67  Wis.  75  (1886);  Olmsted 

57  N.  B.  1109  (1900).  v.  Keyes,  85  N.  Y.  593  (1881);  Stein- 

88  New  York,  etc.,  Ins.  Co.  v.  Arm-  back  v.  Diepenbrock,  158  N.  Y.  24, 

strong,  117  U.  S.  591  (1886);  Fitz-  Woodruff  Ins.  Cas.  402  (1899); 

gerald  v.  Hartford,  etc.,  Ins.  Co.,  56  Clark  v.  Allen,  11  R.  I.  439  (1877); 

Conn.  116  (1888);  Mutual,  etc.,  Ins.  Falk  v.  Janes,  49  N.  J.  Eq.  484 

Co.  v.  Allen,  138  Mass.  24  (1884);  (1892);  Eckel  v.  Renner,  41  Ohio 

Pingrey  v.  National  L.  Ins.  Co.,  144  St.  232  (1884);  Roller  v.  Beam,  86 

Mass.  374  (1887);  Martin  v.  Stub-  Va.  512,  6  L.  R.  A.  136  (1899),  an- 

bings,  126  111.  387  (1888);  Bushnell  notated.  See  §§  62,  63,  supra. 


§    362  LIFE,   ACCIDENT   AND   INDEMNITY    INSURANCE.  404 

This  restriction  upon  the  assignability  of  such  a  policy  is  neces- 
sary not  only  for  the  protection  of  the  company,  but  for  the  purpose 
of  protecting  the  rights  of  the  beneficiary ;  and  hence,  if  the  company 
does  not  by  the  terms  of  the  contract  require  that  its  consent  must 
be  given  to  an  assignment,  the  beneficiary  or  the  insured,  if  the  right 
is  reserved,  may  dispose  of  the  policy  at  will. 

The  parties  may  place  such  restrictions  upon  the  right  to  transfer 
the  policy  as  they  choose.  A  policy  required  the  consent  of  the  com- 
pany to  an  assignment  and  provided  that  with  such  consent  a  policy 
so  assigned  as  security  for  the  claim  of  a  creditor,  as  beneficiary, 
should  not  exceed  the  amount  of  the  actual  bona  fide  indebtedness 
of  the  member  to  him  existing  at  the  time  of  the  death  of  the  in- 
sured, together  with  any  payments  made  to  the  association  upon  the 
certificate  or  policy  of  insurance  by  such  creditor,  with  interest 
thereon,  and  "this  certificate  or  policy  of  insurance  as  to  all  amounts 
in  excess  thereof  shall  be  null  and  void/'  It  was  held  that  the 
original  beneficiary  had  parted  with  all  his  interest  in  the  policy  by 
the  assignment.86  "The  condition  in  that  regard  may  be  considered 
harsh/'  said  Marshall,  J.,  "but  courts  must  enforce  contracts  as 
they  find  them.  If  a  person  sees  fit  to  make  an  insurance  contract 
so  that  an  assignment  thereof  to  one  of  his  creditors  will  have  the 
effect  of  limiting  all  liability  thereon  to  the  amount  due  such  creditor 
from  him  at  the  time  of  his  death,  there  is  no  law  to  prevent  it,  and 
he  and  those  who  come  after  him  must  abide  thereby.  There  can 
be  no  question  but  that  an  insurance  company  may,  by  contract, 
place  such  restraints  upon  the  assignment  of  its  insurance  policies 
as  it  sees  fit,  not  inconsistent  with  its  own  laws  or  some  statute.  We 
can  not  escape  the  conclusion  that,  by  the  terms  of  the  contract  be- 
fore us,  respondent  must  suffer,  as  the  penalty  for  the  assignment  of 
the  policy,  the  loss  of  all  interest  therein.  This  is  as  plainly  stipu- 
lated in  the  policy  as  language  can  make  it.  The  effect  thereof, 
and  of  the  assignment,  was  to  substitute  a  new  contract  for  the  policy 
as  originally  written,  with  like  conditions,  except  that  the  liability 
of  the  insurer  was  limited  solely  to  the  'assignee/  and  to  the  amount 
due  the  assignee  from  M.  at  the  time  of  his  death,  including  pay- 
ments by  it  to  keep  up  the  policy,  and  interest  thereon,  not  exceeding 
in  all  the  amount  payable  under  the  contract  in  the  absence  of  the 
assignment." 

88  McQuillan  v.  Mutual,  etc.,  Ass'n  as  collateral  security:  McQuillan  v. 
(Wis.),  87  N.  W.  1069  (1901).  The  Mutual,  etc.,  Ass'n  (Wis.),  88  N.  W. 
limitation  applies  to  an  assignment  925  (1902). 


405  STIPULATIONS    OF    LIFE   INSURANCE   POLICY.  §    363 

§  363.  Notice  to  company. — The  provision  above  quoted  does  not 
prohibit  the  assignment  of  the  contract,  but  provides  that  no  assign- 
ment thereof  shall  take  effect  until  written  notice  thereof  shall  be 
given  to  the  company.  It  is  sometimes  held  to  be  merely  directory 
and  not  to  affect  the  legality  of  the  transfer  as  between  the  insurer 
and  the  assignee  of  the  policy.  Certainly  no  one  but  the  insurer  can 
question  the  validity  of  the  assignment  where  no  notice  is  given.87 

The  clause  does  not,,  like  that  contained  in  many  policies,  provide 
that  an  assignment  without  the  consent  of  the  company  shall  be 
void.  As  said  in  a  Minnesota  case,88  where  the  policy  contained  a 
somewhat  similar  provision,  "the  consent  of  the  company  to  an  as- 
signment is  not  necessary.  All  that  is  required  is  that  the  assign- 
ment be  in  writing  on  the  policy  and  a  copy  of  it  furnished  to  the 
company  within  thirty  days.  This  provision  is  not  one  which  is  in- 
tended to  guard  against  an  increase  of  risk,  and  does  not  go  to  or 
infuse  itself  into  the  essence  of  the  contract.  Its  sole  purpose  is  to 
protect  the  company  against  the  danger  of  having  to  pay  the  policy 
twice,  by  requiring  written  evidence  of  any  change  of  beneficiaries  to 
be  put  in  reliable  form  and  promptly  furnished  to  the  company.  All 
that  could,  at  the  very  most,  be  claimed  as  the  effect  of  non-com- 
pliance with  this  stipulation  is  that  the  company  might  disregard  an 
attempted  assignment  and  pay  the  money  to  the  original  beneficiary; 
in  other  words,  such  attempted  assignment  would  be  merely  voidable 
at  the  option  of  the  company." 

The  clause  will  not  prevent  the  vesting  of  an  equitable  interest 
in  the  proceeds  of  the  policy  in  an  assignee  who  has  an  interest  in 
the  continuance  of  the  life  of  the  insured.89 

In  Tennessee  the  court  said:00  "The  question  as  to  the  necessity 
of  the  knowledge  and  assent  of  the  underwriters  to  an  assignment  of 
the  policy  is  very  different  with  reference  to  fire  policies  from  life 
and  marine  policies.  The  assent  of  the  company  to  an  assignment, 
in  order  to  give  it  validity  as  against  the  office  in  case  of  a  fire  policy, 
is  generally  admitted;  and  notice  of  assignment  must,  therefore,  be 

^Embry's    Adm'rs    v.   Harris,   21  w  Mutual,  etc.,  Ins.  Co.  v.  Hamil- 

Ky.  L.  714,  52  S.  W.  958  (1899).  ton,   5    Sneed    (Tenn.)    269    (1857); 

88  Hogue  v.  Minnesota  Pack.,  etc.,  Robinson     v.     Gator,     78     Md.     72 
Co.,     59     Minn.     39,    60     N.    W.    812  (1893);   New  York,  etc.,  Ins.  Co.  v. 
(1894).  Flack,  3  Md.  341,  56  Am.  Dec.  742 

89  Travelers'  Ins.  Co.  v.  Grant,  54  (1852). 
N.  J.  Eq.  208,  33  Atl.  1060   (1896). 


§    363  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  40(5 

given  or  the  assignee  will  not  be  entitled  to  demand  the  insurance 
money.  The  reason  for  this  requirement  in  fire  policies  is  obvious. 
In  such  cases  the  personal  character  of  the  insured  for  integrity  and 
prudence  is  a  most  important  consideration.  In  the  language  of  the 
books,  there  is  infused  into  the  contract  of  fire  insurance  something 
of  the  nature  of  a  choice  of  persons.  The  insurer  might  be  quite 
willing  to  underwrite  a  policy  for  one  person,  but  not  that  of  another 
of  different  character  and  habits.  The  known  reputation  of  the  in- 
sured might  be  a  guarantee  that  he  would  not  secretly  destroy  his 
own  property  with  a  view  to  recover  the  insurance  money,  while  that 
of  the  assignee  might  furnish  no  such  assurance.  But  no  such  risk 
exists  in  case  of  an  insurance  on  the  life  of  an  individual,  nor  in 
case  of  marine  policies.  In  the  latter  case  the  assent  of  the  insurer 
to  an  assignment  of  the  policy  or  notice  of  such  assignment  is  not 
indispensable,  in  order  to  entitle  the  assignee  of  the  policy  to  recover 
the  money  of  the  insurer.  We  are  of  the  opinion,  therefore,  that,  as 
between  the  insurer  and  the  assignee  of  a  life  policy,  notice  of  as- 
signment is  not  required  to  complete  the  right  of  the  latter  to  re- 
ceive the  insurance  money  from  the  former." 

There  are  decisions,  however,  to  the  effect  that  the  company  is 
entitled  to  the  full  benefit  of  this  provision  of  the  contract  on  the 
theory  that  it  is  intended  to  prevent  speculative  insurance.91  Thus, 
it  was  said  in  Massachusetts  that,  "as  the  policy  of  the  law  accords 
with  its  purpose,  the  court  will  not  regard  with  favor  any  rights 
sought  to  be  acquired  in  contradistinction  to  the  provision."92 

At  the  most,  a  failure  to  give  the  required  notice  invalidates  an 
attempted  assignment,  but  does  not  avoid  the  policy.93  A  notice 
given  within  a  reasonable  time  after  an  assignment  is  sufficient,  al- 
though the  insured  may  have  died  in  the  meantime.94 

The  provision  requiring  the  consent  of  the  company,  "in  case  of 
an  assignment"  of  a  benefit  certificate,  does  not  apply  to  a  change  of 
beneficiaries.95  Such  a  provision  in  a  policy,  which  is  payable  to  the 

81  Stevens    v.  Warren,   101    Mass.  The   requirement  that  notice   shall 

564    (1869);    Moise  v.   Mutual,   etc.,  be  given  the  company  and  its  con- 

Ass'n,  45  La.  Ann.  736  (1893).  sent   obtained    may,    of    course,    be 

92  Stevens    v.  Warren,   101    Mass,  waived  by  the  company:     Anthony 

564  (1869).  v.    Massachusetts    Ben.   Ass'n,    158 

98  Marcus  v.    St.   Louis,   etc.,    Ins.  Mass.  322  (1893). 
Co.,  68  N.  Y.  625   (1877).  95 Carpenter   v.   Knapp,   101    Iowa 

84  New  York,  etc.,  Ins.  Co.  v.  Flack,  712,  38  L.  R.  A.  128  (1897). 
3  Md.  341,  56  Am.  Dec.  742   (1852). 


407  STIPULATIONS   OF   LIFE   INSURANCE   POLICY.  §    364 

executor  or  administrator  of  the  insured,  with  the  right  to  the  com- 
pany at  its  option  to  pay  the  benefit  to  any  of  a  certain  class  of 
persons  who  should  be  equitably  entitled  thereto  by  reason  of  having 
incurred  expenses  for  the  benefit  of  the  insured,  does  not  prevent  the 
assignment  of  a  policy  by  the  insured  in  the  absence  of  its  exercise 
of  the  option  thus  reserved.96 

Under  the  New  York  statute,  which  authorizes  a  married  woman 
to  insure  her  husband's  life  for  her  sole  use,  a  policy  was  held  not 
assignable.  The  court  said:  "Policies  of  life  insurance  in  favor 
of  the  wife  on  the  life  of  the  husband  we  have  persistently  held  to 
be  unassignable.  We  determined  that  their  peculiar  character  and 
purpose  necessarily  took  from  them  the  chief  and  most  important 
characteristic  of  property  in  general."97  But  a  subsequent  law  au- 
thorizes the  assignment  of  such  a  policy  with  the  written  consent  of 
the  husband.98  Under  this  statute  it  was  held  that  an  assignment 
was  valid  where  it  appeared  that  the  husband  gave  his  oral  consent 
and  the  assignment  was  for  a  consideration  received  by  him  for  the 
purpose  of  enabling  him  to  maintain  his  business  and  support  a 
family.99 

Where  a  statute  authorizes  a  married  woman  to  sell  and  convey 
any  of  her  personal  property,  she  may  sell  and  convey  her  right  to 
recover  upon  a  policy  of  life  insurance  in  which  she  is  the  bene- 
ficiary.100 

§  364.  Manner  of  making  assignment. — As  the  intention  of  the 
parties  must  govern,  a  transfer  of  the  policy  by  delivery,  with  verbal 
directions  as  to  the  disposition  of  the  proceeds,  is  a  good  assign- 
ment,101 notwithstanding  the  fact  that  the  policy  requires  the  trans- 

86  Prudential  Ins.  Co.  v.  Young,  14  (N.   Y.)     312     (1900),   under    Laws 
Ind.  App.  560,  43  N.  E.  253   (1896).  1879,  ch.  248. 

87  Eadie  v.    Slimmon,   26   N.   Y.   9  'JS  Dannhauser   v.   Wallenstein,   60 
(1862);     Baron    v.    Brummer,     100  N.  Y.  Supp.  50  (1899). 

N.   Y.   372    (1885);    Dannhauser   v.  10°  Supreme  Assembly  v.  Campbell, 

Wallenstein,  65  N.  Y.  Supp.  219,  52  17  R.  I.  402,  13  L.  R.  A.  601  (1891). 

App.   Div.    (N.   Y.)    312    (1900).     A  101  New    York,    etc.,     Ins.    Co.    v. 

contrary  conclusion  was  reached  un-  Flack,  3  Md.  341,  56  Am.  Dec.  742 

der  similar  statutes  in  Maryland  in  (1852);   Chapman  v.  Mcllwrath,  77 

Emerick    v.   Coakley,    35    Md.    188  Mo.    38,    46    Am.    Rep.    1     (1882); 

(1871).  Hewins    v.    Baker,    161     Mass.    320 

88  See  Dannhauser  v.  Wallenstein,  (1894),  and  cases  there  cited. 
65    N.    Y.    Supp.    219,    52   App.    Div. 


§    365  LIFE,   ACCIDENT   AND    INDEMNITY    INSURANCE.  408 

fer  to  be  in  writing.102  Even  delivery  of  the  policy  is  not  always 
necessary,103  as  where  a  written  assignment  is  executed  and  delivered 
to  the  assignee,  and  the  policy  is  retained  by  the  insured.104  A  life 
insurance  policy  is  assignable  by  parol  when  accompanied  by  a  de- 
livery.105 A  letter  from  the  insured  to  the  insurer,  requesting  that 
the  insurance  be  made  payable,  in  case  of  his  death,  to  his  son,  is  not 
an  assignment  of  the  contract,  as  under  the  circumstances  the  insured 
retained  dominion  over  it,  and  could  cancel,  or,  with  the  consent  of 
the  company,  modify  the  same.106 

The  execution  by  the  insured  of  an  assignment  of  a  policy  to  his 
mother  as  a  gift,  he  retaining  possession  of  it  and  notifying  her  that 
he  had  made  the  assignment,  and  "would  keep  it  for  her,"  is  not  a 
complete  delivery,  and  the  insured  retains  the  power  to  make  an- 
other assignment  of  the  policy.101  Where  the  policy  was  made  pay- 
able to  the  administrator  or  executor  of  the  insured,  and  the  insured 
immediately  delivered  it  to  a  creditor,  saying  that  it  was  an  over- 
sight that  such  creditor  was  not  named  as  beneficiary,  and  the  cred- 
itor held  the  policy  until  after  the  death  of  the  insured,  it  was  held 
that  there  was  a  valid  assignment  of  the  policy.108 

Even  where  a  writing  is  required  it  is  not  necessary  that  any  par- 
ticular form  of  words  be  used.109  The  language  must,  however,  be 
sufficient  to  show  an  intention  to  make  the  assignment,  and  it  seems 
that  written  directions  as  to  the  manner  of  the  disposition  of  the 
fund  are  not  sufficient.110 

§  365.  Assignment  of  policy  by  assignee. — The  assignee  of  a 
policy  held  as  collateral  security  for  the  debt  of  the  insured  can  not, 
in  the  absence  of  a  provision  therefor  in  the  instrument  of  assign- 
ment, either  sell  or  surrender  up  the  policy  to  the  company  for  its 
cash  value  until  he  has  given  the  insured  a  reasonable  time  to  re- 

102  Hewins    v.    Baker,    161    Mass.  106  Alvord  v.  Luckenbach,  106  Wis. 
320  (1894).  537,  82  N.  W.  535  (1900). 

103  surges  v.  New  York,  etc.,  Ins.  1OT  Weaver  v.  Weaver,  182  111.  287, 
Co.    (Tex.),    53    S.    W.    602    (1899).  55  N.  E.  338   (1899). 

Mailing  the  policy  is  a  sufficient  de-  10S  Hancock  v.  Fidelity,  etc.,  Ins. 

livery:  Ib.  Co.  (Tenn.),  53  S.  W.  181  (1899). 

1M  Scott  v.  Dickson,  108  Pa.  St.  6,  109  Swift  v.  Railway,  etc.,  Ass'n, 

56  Am.  Rep.  192  (1884).  96  111.  309  (1880). 

105  Hancock  v.  Fidelity,  etc.,  Ins.  "°  St.  Clair,  etc.,  Soc.  v.  Fietsam, 

Co.  (Tenn.),  53  S.  W.  181  (1899).  97  111.  474  (1881). 


409  STIPULATIONS    OF    LIFE    INSURANCE   POLICY.  §    366 

deem  it.111  But  such  an  assignee  has  the  right,  under  proper  cir- 
cumstances, to  assign  the  policy  to  another  party.  Thus,  one  who 
holds  a  policy  as  collateral  security  for  the  payment  of  a  note  may 
assign  the  same  to  an  indorsee  of  the  note  and  confer  on  such  as- 
signee the  right  to  hold  the  policy  as  collateral  security  for  the 
note.112  A  policy  of  life  insurance  is  not  a  negotiable  instrument. 
Where  the  insured  assigned  a  policy  to  H.  as  security  for  a  debt,  and 
H.  subsequently  assigned  it  to  a  bank  as  security  for  money  borrowed, 
it  was  held  that  the  bank  took  the  policy  subject  to  the  equities  ex- 
isting in  favor  of  the  insured,  unless  the  conduct  of  the  latter  was 
such  as  to  create  an  estoppel,  and  the  fact  that  the  assignment  from 
the  insured  to  H.  was  absolute  in  form  would  not  create  such  an  es- 
toppel. It  was  held,  however,  that  the  laches  of  the  insured  and  his 
practical  abandonment  of  the  policy  for  eleven  years  by  neglecting 
to  take  any  active  measures  to  recover  it  from  H.,  and  neglecting 
during  all  that  time  to  pay  the  premiums  necessary  to  keep  it  from 
lapsing,  would  estop  him  from  asserting  any  rights  under  the  policy 
or  attempting  to  avail  himself  of  its  benefits  as  against  H.  or  his 
assignee,  the  bank,  who  had  kept  it  alive  by  paying  the  premiums 
at  its  own  expense.113 

VI.     Incontestable    Clause. 

This  policy,,  after  two  years,  will  be  incontestable,  except  for  non- 
payment of  premiums. 

§  366.  Incontestable. — This  provision  is  neither  unreasonable  nor 
contrary  to  public  policy.114  There  is  some  controversy  as  to  whether 
under  it  the  insurer  can  raise  the  question  of  fraud  after  the  expira- 
tion of  the  period.  It  was  recently  held  in  Iowa  that  a  provision 
making  a  policy  absolutely  incontestable  from  date  on  any  ground 
is  unlawful  and  invalid  in  so  far  as  it  relates  to  fraud  in  the  pro- 
curement of  the  policy.115  But  the  weight  of  authority  is  to  the 
effect  that  such  stipulation  is  merely  in  the  nature  of  a  statute  of 
limitations,  and  is  valid  even  as  against  the  defense  of  fraud.11'  An 

lllManton   v.   Robinson,   19   R.    I.  "'Clement  v.   New  York   L.   Ins. 

405,  34  Atl.  148,  37  Atl.  148   (1896).  Co.,  101  Tenn.  22,  46  S.  W.  561,  42 

112  Corcoran  v.  Mutual  L.  Ins.  Co.,  L.  R.  A.  247  (1898). 

183  Pa.  443,  39  Atl.  50  (1898).  115  Welch  v.  Union,  etc.,   Ins.  Co., 

113 Brown    v.    Equitable    L.    Assur.  108  Iowa  224,  78  N.  W.  853   (1899). 

Soc.,  75  Minn.  412  (1899).  ""Clement   v.   New   York  L.   Ins. 


§    366  LIFE,   ACCIDENT   AND   INDEMNITY    INSURANCE.  410 

exception  is  made  in  cases  where  the  insured  or  the  beneficiary  has 
no  insurable  interest,  and  that  defense,  being  founded  on  public 
policy,  is  always  open  to  the  company.117 

The  clause  controls  all  matters  which  would  have  the  effect  of 
defeating  or  destroying  the  contract  of  life  insurance,  such  as  those 
relating  to  the  cause  of  death  or  the  habits  of  the  insured,  although 
it  will  not  control  matters  which  affect  the  remedy  merely.118 

A  policy  containing  this  provision  is  not  avoided  although  the 
insured  commits  suicide  after  the  expiration  of  the  period,  notwith- 
standing an  agreement  in  the  application  that  suicide  is  not  one  of 
the  risks  assumed  under  the  policy.119 

It  applies  where  the  company  seeks  to  avoid  liability  by  virtue  of 
a  clause  to  the  effect  that  the  policy  shall  be  void  "if  the  insured  dies 
in  consequence  of  his  own  criminal  action."120  In  a  recent  Wiscon- 
sin case,  it  was  held  that  the  incontestable  clause  covered  misstate- 
ments  or  admissions  of  the  insured  respecting  his  health.  The  court 
said:121  "The  incontestable  clause  would  seem  to  effectually  bar 
this  defense.  If  this  clause  be  not  altogether  a  glittering  generality 
put  in  for  no  purpose  except  to  induce  men  to  insure,  it  would  seem 
that  it  must  cover  such  misstatements  or  admissions  as  are  here  al- 
leged." 

In  Texas  it  was  held  that  a  clause  which  provided  that  if  the 
terms  of  the  policy  were  complied  with,  it  should  be  incontestable  after 
one  year  from  its  date,  rendered  the  policy  incontestable  for  false 
warranties  after  the  expiration  of  one  year,  although  its  language 
was  of  uncertain  and  doubtful  meaning.122 

Co.,  101  Tenn.  22,  42  L.  R.  A.  247,  121  Patterson  v.  Natural  Premium, 

46  S.  W.  561  (1898).    See  §  68,  supra,  etc.,  Ins.  Co.,  100  Wis.  118,  42  L.  R. 

117  Manufacturers'    L.    Ins.    Co.    v.  A.  253,  75  N.  W.  980  (1898);  citing 
Anctil,  28  Can.  S.  C.  103   (1897).  Wright  v.   Mutual,   etc.,   Ass'n,   118 

118  Massachusetts,     etc.,     Ass'n     v.  N.    Y.    237,    23    N.    E.    186    (1890); 
Robinson,  104  Ga.  256,  30  S.  E.  918,  Simpson  v.  Life  Ins.  Co.,  115  N.  C. 
42  L.  R.  A.  261  (1898).  393,  20  S.  E.  517    (1894);    Goodwin 

110  Goodwin     v.     Provident,     etc.,  v.    Provident,   etc.,   Ass'n,    97    Iowa 

Ass'n,  97  Iowa  226,   66  N.  W.   157,  226,  66  N.  W.  157   (1896);   Kline  v. 

32  L.  R.  A.  473  (1896);  Mutual  Re-  National  Ben.  Ass'n,   111   Ind.   462, 

serve,   etc.,  Ass'n  v.  Payne    (Tex.),  11  N.  E.  620  (1887). 

32  S.  W.  1063  (1895).  m Franklin  Ins.  Co.  v.  Villeneuve 

120  Sun   L.   Ins.   Co.  v.   Taylor,   22  (Tex.    Civ.    App.),    60    S.    W.    1014 

Ky.  L.  37,  56  S.  W.  668  (1900).  (1901). 


411  STIPULATIONS   OF    LIFE   INSURANCE   POLICY.  §    367 

VII.     Special  Privileges. 

This  policy,  while  in  force,  will  participate  annually  in  the  com- 
pany's distribution  of  surplus  as  ordered  by  the  directors,  and  the 
special  privileges  printed  on  the  third  page  hereof  are  hereby  made 
a  part  of  the  policy  contract. 

§  367.  Special  privileges. — Almost  all  of  the  policies  now  in  use 
contain  some  such  provision  as  that  quoted  above.  The  special  privi- 
leges thus  provided  for,,  of  course,  differ  in  each  policy,  and,  there- 
fore, require  no  special  consideration  at  this  time. 

VIII.     Application  a  Part  of  Contract. 

In  consideration  of  the  statements  and  agreements  in  the  applica- 
tion for  this  policy,  which  are  hereby  made  a  part  of  this  contract. 

§  367a.  Provisions  in  the  application. — The  application  upon 
which  a  policy  of  life  insurance  issues  is  by  virtue  of  this  clause  in- 
corporated into  and  made  a  part  of  the  contract  of  insurance.  State- 
ments therein  contained  in  answer  to  questions  of  the  agent  of  the 
company  and  its  medical  examiner  are  generally,  in  express  words, 
made  warranties,  and,  in  the  absence  of  a  statute  requiring  a  certain 
construction,  they  will  be  construed  as  warranties  under  the  general 
rules  already  stated.  The  form  of  application  used  by  the  com- 
pany whose  policy  we  have  been  considering  contains  the  following 
provision  in  addition  to  the  answers  to  the  specific  questions: 

(a)  Excepted  Risks. 

I  further  agree  that  the  policy  hereby  applied  for  shall  become 
and  be  null  and  void  if,  within  two  years  from  date  hereof,  I  shall 
commit  suicide  while  sane  or  insane;  or  within  such  period,  and 
without  the  written  consent  of  the  company,  shall  reside  in  or  travel 
to  the  Philippine  Archipelago  or  the  Klondike  region,  or  reside  or 
travel  elsewhere  than  in  the  remaining  portions  of  the  United  States 
and  Canada,  or  in  or  to  Europe,  or  be  personally  engaged  in  blasting, 
mining,  submarine  operations,  or  in  the  making  of  explosives,  or  in 
the  service  of  any  railway  train,  or  on  a  steam  or  sailing  vessel,  or  in 
naval  or  army  service  in  times  of  war. 


368 


LIFE,   ACCIDENT    AND    INDEMNITY    INSURANCE. 


§  368.  Suicide — Sane  or  insane. — In  order  to  avoid  the  contro- 
versy which  has  arisen  over  the  meaning  of  the  word  "suicide,"  the 
insurance  companies  now  generally  protect  themselves  by  providing 
that  the  policy  shall  be  void  if  the  insured  die  by  suicide,  while  sane 
or  insane.123  In  some  states  this  defense  is  forbidden  unless  it  is 
made  to  appear  that  the  insured  contemplated  suicide  at  the  time 
he  took  out  the  policy.124 

The  provision  is  an  exact  and  reasonable  limitation  upon  the  liabil- 
ity of  the  company,  and  under  it  the  insurer  is  not  liable,  although  the 
insured  kills  himself  while  in  a  condition  which  renders  him  wholly 
unconscious  of  the  moral  nature  of  the  act.123 

It  covers  a  case  where  the  person  who  commits  suicide  is  entirely 
bereft  of  reason.126  This  rule  is  recognized  to  its  fullest  extent  by 
the  supreme  court  of  the  United  States,  which,  in  a  leading  case, 
said:127  "For  the  purposes  of  this  suit  it  is  enough  to  say  that 
the  policy  was  rendered  void,  if  the  insured  was  conscious  of  the 
physical  nature  of  his  act,  and  intended  by  it  to  cause  his  death, 
although,  at  the  time,  he  was  incapable  of  judging  between  right 


123  An  examination  of  the  policies 
and  applications  now  in  use  shows 
that   almost   all    the    leading    com- 
panies now  insert  the  words  "sane 
or  insane." 

124  Rev.  St.  Mo.  1879,  §  5982;  Rev. 
St.  Mo.  1889,  §  5855;   ^tna  L.  Ins. 
Co.  v.  Florida,  69  Fed.  932,  16  C.  C. 
A.  618    (1895),  note;   Knights  Tem- 
plars, etc.,  Co.  v.  Jarman,  104  Fed. 
638,  44  C.  C.  A.  93  (1900);  Wallace  v. 
Bankers'  L.  Ass'n,  80  Mo.  App.  102 
(1899).        See,      also,      Haynie      v. 
Knights  Templars,  etc.,  Co.,  139  Mo. 
416,  41  S.  W.  461  (1897).     The  Ohio 
statute  providing  that  the  company 
is   estopped    to    set   up   certain    de- 
fenses, after  the  lapse  of  three  years 
(Rev.  St.,  §  3626),  does  not  estop  the 
insurer     from     defending     on     the 
ground  of  suicide:    Starck  v.  Union, 
etc.,  Ins.  Co.,  134  Pa.  St.  45,  19  Atl. 
703   (1890). 

125  Scherar  v.  Prudential  Ins.  Co. 
(Neb.),     88     N.     W.     687     (1902); 
Tritschler  v.  Keystone,   etc.,  Ass'n, 


180  Pa.  St.  205,  36  Atl.  734  (1897); 
Spruill  v.  Northwestern,  etc.,  Ins. 
Co.,  120  N.  C.  141,  27  S.  E.  39 
(1897):  Zimmerman  v.  Masonic 
Aid  Ass'n,  75  Fed.  236  (1896);  Kel- 
ley  v.  Mutual  L.  Ins.  Co.,  75  Fed. 
637  (1896);  Insurance  Co.  v.  Fox, 
106  Tenn.  347,  61  S.  W.  63  (1901); 
Hart  v.  Modern  Woodmen,  60  Kan. 
678,  57  Pac.  936  (1899);  Woiten  v. 
American,  etc.,  Ins.  Co.  (Tex.),  51 
S.  W.  1105  (1899);  Scarth  v.  Se- 
curity, etc.,  Soc.,  75  Iowa  346,  39  N. 
W.  658  (1888);  Leman  v.  Manhattan 
L.  Ins.  Co.,  46  La.  Ann.  1189, 
15  So.  388  (1894).  For  some  lim- 
itations, see  Mutual,  etc.,  Ins.  Co. 
v.  Daviess,  87  Ky.  541,  9  S.  W. 
812  (1888);  Sabin  v.  Senate,  etc., 
90  Mich.  177,  51  N.  W.  202  (1892). 

126  De   Gogorza   v.    Knickerbocker, 
etc.,  Ins.  Co.,  65  N.  Y.  232  (1875). 

127  Bigelow  v.  Berkshire,  etc.,  Ins. 
Co.,  93  U.  S.  284   (1876).     See,  also, 
Connecticut,  etc.,  Ins.  Co.  v.  Akens, 
150  U.  S.  468  (1893). 


413  STIPULATIONS    OF   LIFE   INSURANCE   POLICY.  §    369 

and  wrong  and  of  understanding  the  moral  consequences  of  what  he 
was  doing.''  So,  it  was  held  in  Michigan  that  such  a  proviso  "covers 
all  conscious  acts  of  the  insured  by  which  death  by  his  own  hand  is 
compassed,  whether  he  was  at  the  time  sane  or  insane.  If  the  act 
was  done  for  the  purpose  of  self-destruction,  it  matters  not  that  the 
insured  had  no  conception  of  the  wrong  involved  in  its  commission."128 
It  is  immaterial  whether  the  act  was  deliberate  or  otherwise.129  The 
policy  is  void,  although  the  insured  acts  under  an  insane  impulse 
which  overcomes  his  will  power.130 

§  369.    Where  there  is  no  provision  as  to  the  effect  of  suicide. — 

The  supreme  court  of  the  United  States  has  recently  held  that  in- 
tentional self-destruction  by  the  assured  when  sane  is  not  a  risk  cov- 
ered by  a  life  insurance  policy  even  when  the  policy  does  not  except 
such  a  death.  It  was  further  said  that  a  contract  of  life  insurance 
which  expressly  provided  for  payment  if  the  insured,  while  sane, 
took  his  own  life,  would  be  against  public  policy,  as  it  would  have  a 
tendency  to  tempt  persons  to  commit  suicide  for  the  purpose  of  pay- 
ing their  debts  or  providing  for  those  who  are  dependent  upon  them.131 
Before  this  decision,  the  weight  of  authority  sustained  the  rule  that 
where  the  contract  contains  no  provision  to  the  effect  that  suicide 
shall  invalidate  the  contract,  it  is  no  defense  to  an  action  on  the 
policy  that  the  insured  took  his  own  life.132  But  a  distinction  should 
be  made  between  cases  where  the  insured  kills  himseL'  for  the  purpose 
of  obtaining  the  money  for  the  use  of  his  own  estate,  and  where 
the  money  is  payable  to  a  third  person  as  beneficiary.  Thus,  it  was 
said  :133  "In  the  law  of  insurance,  suicide  is  not  as  a  rule  recognized 

128  Streeter  v.  Western  Union,  etc.,     332    (1882);    Hartman   v.   Keystone 
Soc.,    65    Mich.    199,   31   N.   W.    779,     Ins.  Co.,  21  Pa.  St.  466   (1853).    See 
9    Am.    St.    882    (1887).      See,    also,     note  in  59  Am.  Dec.  487. 

Sabin  v.  Senate,  etc.,  90  Mich.  177,  1W  Campbell  v.  Supreme  Conclave 

51  N.  W.  202   (1890).  -(N.    J.),   54    L.    R.    A.    576    (1902); 

129  Union     etc.,    Ins.     Co.   v.   Hoi-  Seller    v.    Economic    L.    Ass'n,    105 
lowell,   14   Ind.   App.   611,   43  N.   E.  Iowa   87,   43   L.   R.   A.   537    (1898); 
277  (1896)  Darrow  v.  Family  Fund  Soc.,  116  N. 

™  Billings    v.    Accident    Ins.   Co.,  Y.  537,  15  Am.  St.  430,  22  N.  E.  1093, 

64  Vt.  78,  24  Atl.  656,  17  L.  R.  A.  89  6  L.  R.  A.  495  (1889). 

(1892),  annotated.  133Kerr    v-    Minnesota,  etc.,   Soc., 

'"  Ritter    v     Mutual    L.    Ins.    Co.,  39  Minn.  174,  12  Am.  St.  631,  39  N. 

169  U    S.  139    (1897).     See  s.  c.  in  W.   312    (1888).     See   Mills  v.  Reb- 

70  Fed.  954;  17  C.  C.  A.  537  (1895).  stock,   29   Minn.  380,   13  N.  W.   162 

See,  also,  Supreme  Commandery  v.  (1882);  Fitch  v.  American,  etc.,  Ins. 

Ainsworth,  71  Ala.  436,  46  Am.  Rep.  Co.,  59  N.  Y.  557  (1875). 


§    370  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  414 

as  a  ground  of  exemption  from  liability  or  for  forfeiture  of  a  policy 
issued  for  the  benefit  of  a  third  person,"  In  Pennsylvania  it  was 
recently  held  that  suicide  by  the  insured  under  a  policy  payable  to 
his  wife  does  not,  in  the  absence  of  any  provision  on  the  subject,  avoid 
the  policy  as  against  the  wife.134  This  rule  prevails  in  Iowa135  and 
Illinois/36  although  it  is  held  that  suicide  will  avoid  a  policy  which 
is  payable  to  the  assured  or  his  personal  representatives.  This  dis- 
tinction is  recognized  in  most  of  the  cases.137  Hence  a  policy  which 
contains  no  provision  with  reference  to  forfeiture  if  the  insured  com- 
mits suicide  is  void, .  where  the  insured  deliberately  kills  himself  in 
order  to  secure  the  money  for  the  benefit  of  his  estate.138  If,  how- 
ever, the  policy  is  taken  out  with  the  preconceived  intention,  then 
entertained  by  the  insured,  of  taking  his  own  life  for  the  purpose 
of  obtaining  the  insurance  money,  the  contract  is  void  by  reason  of 
such  fraud,  although  it  contains  no  provision  with  reference  to  the 
effect  of  suicide.139 

§  370.  Suicide — Construction. — There  has  been  so  much  contro- 
versy and  resulting  confusion  over  the  meaning  of  these  words,  as 
used  without  other  descriptive  words,  that  it  is  a  relief  to  find  the 
insurance  companies  inserting  the  clear  and  definite  clause  which 
has  been  quoted.  Where  the  policy  simply  provides  that  suicide  by 
the  insured  shall  render  it  invalid,  the  weight  of  authority  supports 
the  rule  established  by  the  supreme  court  of  the  United  States  in 
the  well-known  Terry  case.140  The  policy  there  under  consideration 
required  the  interpretation  of  the  phrase  "death  by  his  own  hand." 
The  court  charged  the  jury  that  "if  he  was  impelled  to  the  act  by  an 
insane  impulse  which  the  reason  that  was  left  him  did  not  enable 
him  to  resist,  or,  if  his  reasoning  powers  were  so  far  overthrown  by 

134  Morris  v.  State,  etc.,  Assur.  Co.,  139  Parker  v.  Des  Moines  L.  Ass'n, 
183  Pa.  St.  563,  39  Atl.  52    (1897).  108  Iowa  117,  78  N.  W.  826  (1899); 
Contra,    Hopkins    v.    Northwestern  Smith   v.    National    Ben.    Soc.,    123 
L.  Assur.  Co.,  94  Fed.  729  (1899).  N.  Y.  85   (1890). 

135  Parker  v.  Des  Moines  L.  Ass'n,  ""Life  Ins.  Co.  v.  Terry,  15  Wall. 
108  Iowa  117,  78  N.  W.  826   (1899).  (U.     S.)     580     (1872).       See,     also, 

136  Supreme  Lodge  v.  Kutscher,  72  Mutual   L.   Ins.   Co.  v.   Leubrie,   71 
111.  App.  463   (1897).  Fed.    843,    18   C.   C.   A.    332    (1895). 

m  See  Patterson  v.  Natural  Prem.,  The  words  "die  by  his  own  hand," 

etc.,  Ins.  Co.,  100  Wis.  118,  75  N.  W.  or  "by  his  own  act,"  mean  suicide: 

980  (1898),  and  cases  there  cited.  Mutual  L.   Ins.   Co.  v.  Wiswell,   56 

188Ritter  v.  Mutual  L.  Ins.  Co.,  70  Kan.  765,  44  Pac.  996   (1896). 
Fed.  954,  17  C.  C.  A.  537  (1895). 


415  STIPULATIONS   OF   LIFE   INSURANCE    POLICY.  §    370 

his  mental  condition  that  he  could  not  exercise  his  reasoning  facul- 
ties on  the  act  he  was  about  to  do,  the  company  is  liable."  In  affirm- 
ing the  decision  of  Mr.  Justice  Miller  at  circuit,  the  supreme  court, 
through  Mr.  Justice  Hunt,  said:  "We  hold  the  rule  in  question  to 
be  this:  If  the  assured,  being  in  the  possession  of  his  ordinary 
reasoning  faculties,  from  anger,  pride,  jealousy,  or  a  desire  to  escape 
from  the  ills  of  life,  intentionally  takes  his  own  life,  the  proviso 
attaches  and  there  can  be  no  recovery.  If  the  death  is  caused  by  the 
voluntary  act  of  the  insured,  he  knowing  and  intending  that  his 
death  shall  be  the  result  of  his  act,  but  when  his  reasoning  faculties 
are  so  far  impaired  that  he  is  not  able  to  understand  the  moral  char- 
acter, the  general  nature,  consequences  and  effect  of  the  act  he  is 
about  to  commit,  or  when  he  is  impelled  thereto  by  an  insane  im- 
pulse, which  he  has  not  the  power  to  resist,  such  death  is  not  within 
the  contemplation  of  the  parties  to  the  contract,  and  the  insurer  is 
liable." 

In  a  subsequent  case  in  the  same  court,141  where  the  policy  con- 
tained a  provision  to  the  effect  that  "the  self-destruction  of  the  in- 
sured in  any  form,  except  upon  proof  that  the  same  is  the  direct 
result  of  disease  or  accident  occurring  without  the  voluntary  act  of 
the  insured"  should  avoid  the  policy,  Mr.  Justice  Gray  said :  "This 
case  is  governed  by  a  uniform  series  of  decisions  establishing  the  fact 
that  if  one  whose  life  is  insured  intentionally  kills  himself  when*his 
reasoning  faculties  are  so  far  impaired  by  insanity  that  he  is  unable 
to  understand  the  moral  character  of  his  act,  even  if  he  does  under- 
stand its  physical  nature,  consequence  and  effect,  it  is  not  'suicide'  or 
'self-destruction/  or  'dying  by  his  own  hand/  within  the  meaning  of 
those  words  in  a  clause  excepting  such  risks  out  of  a  policy  and  con- 
taining no  further  words  expressly  extending  the  exemption  to  such 
case."142  It  was  held  that  the  clause  under  consideration  covered  a 
case  of  the  insured's  death  as  the  result  of  taking  poison  when  his 
mind  was  so  far  deranged  as  to  be  unable  to  understand  the  moral 
character  of  his  act,  although  he  did  understand  its  physical  conse- 
quences. 

Of  course,  accidental  self-destruction  is  not  suicide  or  self-destruc- 

141  Connecticut,    etc.,   Ins.     Co.    v.  U.  S.  232  (1877);  Manhattan  L.  Ins. 
Akens,  150  U.  S.  468   (1893).  Co.   v.    Broughton,     109     U.    S.    121 

142  Life  Ins.  Co.  v.  Terry,  15  Wall.  (1883);    Connecticut,   etc.,   Ins.   Co. 
(U.S.)  580  (1872);  Bigelow  v.  Berk-  v.   Lathrop,   111  U.   S.   612    (1884); 
shire,   etc.,   Ins.   Co.,   93   U.    S.    284  Accident  Ins.   Co.  v.   Crandall,   120 
(1876);    Insurance  Co.  v.  Rodel,  95  U.  S.  527  (1887). 


§    371  LIFE,   ACCIDENT   AND    INDEMNITY    INSURANCE.  416 

tion  within  the  meaning  of  such  provision  in  an  insurance  contract.143 
A  provision  in  a  policy  that  "self-destruction,  sane  or  insane,"  is  a  risk 
not  assumed  by  the  company  under  the  contract,  applies  only  to  sui- 
cide intentionally  committed.144  So,  the  phrase,  "die  by  his  own  hand 
or  act,  voluntary  or  otherwise,"  does  not  include  the  innocent  or 
accidental  taking  of  an  overdose  of  medicine.145 

§  371.  Presumption — Burden  of  proof. — The  presumption  is  al- 
ways against  the  fact  of  suicide,  and  therefore,  where  there  is  a 
reasonable  doubt  whether  death  was  due  to  suicide  or  accident,  the 
presumption  is  in  favor  of  accident.146 

"It  is  a  proposition  of  law,  supported  by  authority  as  well  as 
reason,  that  this  and  similar  clauses  in  policies  of  insurance,  con- 
ceding them  to  be  valid,  are  not  infracted  by  the  accidental  and  mis- 
taken taking  of  an  overdose  of  medicine  or  poison  or  by  any  unin- 
tentional taking  of  his  life  by  the  insured.147  The  principle  or  rule 
in  cases  of  this  character  is  equally  supported  that  suicide  or  inten- 
tional destruction  by  one's  own  hand  is  not  presumed.  The  pre- 
sumption is  otherwise.  A  company  interposing  a  defense  of  suicide, 
whether  sane  or  insane,  must  overcome  this  presumption,  and  must 
satisfy  the  jury  or  court  trying  the  case  by  a  preponderance  of  the 
evidence  that  the  self-destruction  was  intentional."148  The  presump- 

143  Pierce   v.   Travelers',   etc.,    Ins.  U.     S.     468     (1893);     Ingersoll     v. 
Co.,  34  Wis.  389  (1874);  Edwards  v.  Knights,   etc.,    47   Fed.   272    (1891); 
Travelers'  L.  Ins.  Co.,  20  Fed.  661  Travellers'  Ins.  Co.  v.  Sheppard,  85 
(1884);    note  to  Breasted  v.  Farm-  Ga.  751  (1890);  Fidelity  &  C.  Co.  v. 
ers',  etc.,  Co.,  8  N.  Y.   299,  59  Am.  Freeman,  109  Fed.  847,  48  C.  C.  A. 
Dec.  489   (1853).  692  (1901). 

144  Union,  etc.,   Ins.   Co.  v.  Payne,  147  Penfold  v.  Universal,  etc.,  Ins. 
105  Fed.  172,  45  C.  C.  A.  193  (1900).  Co.,  85  N.  Y.  317,  39  Am.  Rep.  660 

145  Penfold  v.  Universal,  etc.,  Ins.  (1881);   Walcott  v.  Metropolitan  L. 
Co.,  85  N.  Y.  317,  39  Am.  Rep.  660  Ins.    Co.,    64    Vt.    221,    24    Atl.    992 
(1881);   Bachmeyer  v.  Mutual,  etc.,  (1891);    Phadenhauer  v.   Germania, 
Ass'n,    82   Wis.    255,   52   N.   W.    101  etc.,  Ins.  Co.,  7  Heisk.   (Tenn.)  567, 
(1892);   Northwestern,  etc.,  Ins.  Co.  19  Am.  Rep.  623   (1872). 

v.  Hazelett,  105  Ind.  212,  4  N.  E.  582  I48  Brown     v.     Sun,    etc.,    Ins.    Co. 

(1885);  Burkhard  v.  Travelers'  Ins.  (Tenn.),    51    L.    R.   A.    252    (1899); 

Co.,    102   Pa.    St.    262    (1883).      See,  citing  Mallory  v.  Travelers'  Ins.  Co., 

also,  Equitable,  etc.,  Soc.  v.  Patter-  47  N.  Y.  52,  7  Am.  Rep.  410  (1871); 

son,    41    Ga.    338,    5   Am.    Rep.    535  Cronkhite  v.  Travelers'  Ins.  Co.,  75 

(1870).  Wis.  116,  43  N.  W.  731  (1889);  Wal- 

148  Travelers'      Ins.      Co.     v.     Me-  cott  v.  Metropolitan  L.  Ins.  Co.,  64 

Conkey,  127  U.  S.  661   (1887);   Con-  Vt    221,   24   Atl.   992    (1891);    Free- 

necticut,  etc.,  Ins.  Co.  v.  Akens,  150  man  v.  Travelers'  Ins.  Co.,  144  Mass. 


417  STIPULATIONS    OF   LIFE    INSURANCE   POLICY.  §    372 

tion  against  suicide  is  sometimes  said  to  exist  only  when  the  insured 
was  sane.149 

The  rule  that  the  burden  rests  upon  the  insurance  company  to 
establish  such  defense  affirmatively  is  not  changed  by  the  fact  that 
the  proofs  of  death  furnished  by  the  plaintiff  stated  the  cause  of 
death  as  suicide.150  But  it  is  incumbent  on  the  plaintiff  to  show 
that  he  was  mistaken  when  he  made  the  statement  in  the  proofs.151 
So,  where  it  appeared  that  the  death  of  the  insured  was  caused  by 
the  taking  of  an  overdose  of  morphine,  the  plaintiff  prevailed  because 
the  defendant  failed  to  prove  by  a  preponderance  of  the  evidence 
that  the  insured  in  taking  the  drug  intended  to  end  his  own  life.152 

§  372.  Residence  and  occupation. — The  provisions  above  quoted 
with  reference  to  residence,  occupation  and  travel  are  clear  and  spe- 
cific. Where  the  policy  prohibited  residence  south  of  a  certain  de- 
gree of  latitude,  but  gave  permission  to  pass  "as  a  passenger  by  the 
usual  routes  of  public  conveyance  to  and  from  any  port  or  place 
within  the  limits,"  it  was  held  not  to  be  invalidated  by  the  fact  that 
the  insured  was  compelled  by  sickness  to  interrupt  his  journey  while 
in  a  place  in  which  travel  was  permitted  but  residence  prohibited.153 

The  provision  with  reference  to  residence  is  waived  by  the  recep- 
tion and  retention  by  the  company  of  the  premium  after  notice  of  a 
breach  of  the  condition  to  an  agent  authorized  to  receive,  and  who 
did  receive  and  retain  the  premium.154 

572    (1887);    Persons    v.    State,    90  Ins.    Co.    v.    Akens,    150    U.    S.    468 

Tenn.    291,    16    S.    W.    726     (1891);  (1893). 

Accident  Ins.  Co.  v.  Bennett,  90  15°  Home  Ben.  Ass'n  v.  Sargent, 
Tenn.  256,  16  S.  W.  723  (1891).  142  U.  S.  691  (1891);  Union,  etc., 
See  further,  as  to  the  presumption  Ins.  Co.  v.  Payne,  105  Fed.  172,  45 
with  reference  to  death  by  suicide,  C.  C.  A.  193  (1900);  Leman  v.  Man- 
Mutual  L.  Ins.  Co.  v.  Wiswell,  56  hattan  L.  Ins.  Co.,  46  La.  Ann.  1189, 
Kan.  765,  35  L.  R.  A.  258  (1896);  15  So.  388  (1894). 
Johns  v.  Northwestern,  etc.,  Ass'n,  m  Keels  v.  Mutual,  etc.,  Ass'n,  29 
90  Wis.  332,  41  L.  R.  A.  547  (1895);  Fed.  198  (1886);  Dennis  v.  Union, 
Standard,  etc.,  Ins.  Co.  v.  Thornton,  etc.,  Ins.  Co.,  84  Cal.  570,  24  Pac. 
100  Fed.  582,  40  C.  C.  A.  564,  49  L.  120  (1890). 

R.  A.  116   (1900);  Connecticut,  etc.,  m  Brown     v.     Sun     L.     Ins.     Co. 

Ins.  Co.  v.  McWhirter,  73  Fed.  444,  (Tenn.),  57  S.  W.  415  (1899). 

19  C.  C.  A.  519  (1896).  183  Converse  v.  Knights  Templars', 

""Mutual,  etc.,  Ins.  Co.  v.  Daviess,  etc.,  Co.,  60  U.  S.  App.  288  (1898). 

87  Ky.  541,  9  S.  W.  812  (1888).    See  1M  Germania      L.      Ins.      Co.      v. 

language  used  in  Connecticut,  etc.,  Koehler,  168  111.  293,  48  N.  E.  297 

(1897). 

27 — ELLIOTT  INS. 


§    373  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  418 

The  policy  also  requires  the  applicant,  in  response  to  a  question, 
to  state  his  occupation — kind  of  business  and  position.  The  state- 
ment with  reference  to  occupation  must  be  substantially  true  or  the 
policy  will  be  rendered  void.155  But  a  statement  that  the  applicant 
is  a  soda-water  maker,  when  he  is  in  fact  a  soda-water  seller,  is  not  a 
breach  of  warranty.156  Where  the  insured  in  his  application  stated 
that  his  occupation  was  that  of  a  dry  goods  store-keeper,  it  was  held 
that  a  failure  to  disclose  that  he  was  occasionally  employed  as  a 
bevel-smoother  of  plate  glass  did  not,  in  the  absence  of  a  fraudulent 
intent  to  mislead,  invalidate  the  policy.157 

§  373.  Death  in  violation  of  law  or  at  the  hands  of  justice. — 
Many  insurance  contracts  provide  that  the  insurer  shall  not  be  liable 
if  the  insured  comes  to  his  death  at  the  hands  of  justice,  or  while  en- 
gaged in  the  violation  of  law.  The  death  of  a  woman  which  results 
from  her  voluntary  submission  to  an  illegal  operation  for  abortion 
results  from  a  violation  of  law  within  the  meaning  of  this  provision, 
and  invalidates  the  policy.158  So,  the  fact  that  the  insured  was  shot 
by  a  police  officer  a  few  minutes  after  he  had  committed  a  robbery, 
and  while  he  was  attempting  to  escape,  prevents  a  recovery  on  the 
policy,  as  the  insured  died  in  consequence  of  his  own  criminal  ac- 
tion.159 A  by-law  of  an  insurance  company  which  provides  that  there 
can  be  no  recovery  should  a  member  come  to  his  death  in  consequence 
of  a  violation  of  a  criminal  law  embraces  any  act  of  the  insured 
which  may  be  denominated  a  crime,  although  it  is  not  a  felony.  But 
it  was  held  that  where  the  insured  struck  another  with  his  hand, 
and  the  latter,  after  throwing  him  down,  inflicted  injuries  from 
which  the  insured  died,  such  death  was  not  in  consequence  of  a  viola- 
tion of  a  criminal  law  within  the  contemplation  of  the  parties.160 

When  suicide  is  not  a  crime  under  the  laws  of  the  state,  a  pol- 
icy which  contains  a  clause  to  the  effect  that  "it  is  to  be  void  if  the 
member  herein  shall  die  in  consequence  of  a  duel  or  at  the  hands  of 

1HDwight  v.  Germania  L.  Ins.  Co.,  720  (1900).     See  illustrations,  §  395, 

103  N.  Y.  341    (1886).  infra. 

™  Grattan  v.  Metropolitan  L.  Ins.  158  Wells  v.  New  England,  etc.,  Ins. 

Co.,  80  N.  Y.  281,  36  Am.  Rep.  617  Co.,    191    Pa.    St.    207,    43    Atl.    126 

(1880);    Kenyon    v.    Knights    Tern-  (1898). 

plar,    etc.,    Ass'n,    122    N.    Y.    247  159  Prudential  Ins.  Co.  v.  Haley,  91 

(1890).  111.  App.  363   (1900). 

^Perrin   v.    Prudential   Ins.    Co.,  1GO  Brown    v.    Supreme    Lodge,    83 

30  Misc.  (N.  Y.)  608,  62  N.  Y.  Supp.  Mo.  App.  633  (1900). 


419  STIPULATIONS    OF    LIFE    INSURANCE    POLICY.  §    373 

justice,  or  by  any  violation  of  or  an  attempt  to  violate  any  criminal 
law  of  the  United  States,  or  of  any  state  or  country  in  which  the 
member  herein  named  may  be/'  is  not  invalidated  although  the  laws 
of  the  state  make  an  attempt  to  commit  suicide  a  crime.  The  court 
said:161  "By  the  act  of  taking  his  own  life  he  violated  no  criminal 
law  unless  the  attempt  to  do  it  may  be  distinguished  from  the  act 
accomplished.  An  act  is  characterized  by  the  purpose,  when  ascer- 
tained, of  the  party  doing  it,  or  by  its  result.  If  the  act  fails  to  ac- 
complish its  purpose,  it  constitutes  an  attempt;  but  if  the  result  of  it 
is  the  consummation  of  the  purpose,  the  act  is  not  commonly  desig- 
nated an  attempt." 

Although  suicide  is  still  technically  a  crime,  if  there  is  no  pun- 
ishment provided  for  either  an  attempted  or  an  accomplished  sui- 
cide, it  is  not  within  such  a  provision.  Especially  should  this  be  held 
where  the  company  has  stricken  out  the  usual  suicide  clause.182 

A  suicide  committed  by  an  alleged  fugitive  from  justice  to  avoid 
arrest  and  trial  for  a  crime  is  not  the  proximate  result  of  the  alleged 
crime,  and  hence  is  not  within  the  proper  meaning  of  the  provision 
that  "if  the  assured  shall  die  in,  or  in  consequence  of,  the  violation 
of  any  criminal  law  of  any  country,  state  or  territory  in  which  the 
assured  may  be,"  the  policy  shall  be  void.163 

Even  though  a  policy  contains  no  provision  for  forfeiture  in  the 
event  of  the  execution  of  the  insured  for  a  crime,  there  can  be  no 
recovery  when  the  insured  is  executed.  In  the  oft-cited  Fauntleroy 
case,164  Lord  Lyndhurt  held  that  a  policy  assuming  to  insure  against 
such  a  risk  would  be  void  as  against  public  policy.  This  rule  applies 
where  it  is  alleged  that  the  conviction  was  erroneous  and  the  insured 
in  fact  innocent,  as  it  would  be  equally  against  public  policy  to  allow 
insurance  against  the  miscarriage  of  justice.  "A  contract  of  life  in- 
surance, written  to  insure  against  a  capital  conviction  in  the  estab- 
lished courts  of  competent  jurisdiction,  in  the  event  that  such  con- 
viction is  unjust  and  unwarranted  by  the  evidence,  is  void,  as  against 
public  policy."166 

181  Darrow  v.   Family   Fund   Soc.,     Ins.  Co.,  100  Wis.  118,  75  N.  W.  980, 
116  N.  Y.  537,  22  N.  E.  1093,  6  L.  R.     42  L.  R.  A.  253    (1898). 

A.    495,    15    Am.    St.    430     (1889);  193Kerr  v.  Minnesota,  etc.,  Ass'n, 

Meachem  v.  New  York,  etc.,  Ass'n,  39  Minn.  174,  39  N.  W.  312  (1888). 

120  N.  Y.  237,  24  N.  E.  283   (1890).  164 Amicable  Society  v.  Bolland,  4 

See  also,  §  401,  infra.  Bligh  (N.  S.)  194,  211  (1830). 

182  Patterson  v.  Natural  Prem.,  etc.,  1M  Hurt    v.    Union,  etc.,   Ins.  Co., 

105  Fed.  419,  44  C.  C.  A.  548  (1900). 


§    374  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  420 

(b )  Statements  with  Reference  to  Habits,  Physical  Condition,  Etc. 

§  374.  Habits. — A  false  statement  to  the  effect  that  the  applicant 
does  not  drink  spirituous  liquors  will  avoid  the  policy.166  Such  a 
statement  precludes  a  recovery  although  he  does  not  use  liquor  ex- 
cessively or  intemperately,  notwithstanding  a  statute  which  pro- 
vides that  all  statements  in  the  application  shall  be  deemed  repre- 
sentations and  not  warranties.167  A  statement  that  the  applicant 
is  of  temperate  habits  does  not  mean  that  he  is  a  total  abstainer,168 
and  the  supreme  court  of  the  United  States  has  held  that  a  man  may 
be  of  temperate  habits  although  he  has  once  had  delirium  tremens.169 
Where  the  applicant  stated  that  he  had  never  used  narcotics,  it  was 
held  that  the  company  could  not  defeat  liability  by  showing  a  use  of 
narcotics  which  did  not  amount  to  a  custom  or  habit.170  Where  the 
applicant  stated  that  he  had  always  been  temperate,  and  that  the 
last  time  he  had  consulted  a  physician  was  about  a  year  before  for 
influenza,  and  ,he  died  of  influenza  four  months  after  the  policy 
was  issued,  and  it  appeared  that  before  the  application  was  made  he 
had  been  frequently  drunk  and  had  consulted  a  physician  within 
four  months  for  vomiting  and  nausea  caused  by  drunkenness,  it  was 
held  that  there  was  a  breach  of  a  material  warranty,  and  there  could 
be  no  recovery  on  the  policy.171 

An  applicant  for  insurance  stated  that  he  had  never  been  intem- 
perate in  the  use  of  intoxicating  liquors,  and  in  construing  the  state- 
ment the  court  said  :172  "An  occasional  excess  in  the  use  of  intoxicat- 
ing liquor  does  not  of  itself  constitute  a  habit,  and  make  a  man  in- 
temperate within  the  meaning  of  this  policy;  but  if  the  habit  has 
been  formed  and  is  indulged  in  of  drinking  to  excess  and  becoming 

163  Malicki   v.    Chicago,    etc.,    Soc.,  import  abstemiousness,  or  at  least 

119  Mich.  151,  77  N.  W.  690  (1899).  moderation— 

187  Union,  etc.,  Ins.  Co.  v.  Lee,  20  "The   rule  of  not  too  much, 

Ky.   L.    839,    47    S.   W.   614    (1898).  But   by    temperance    taught." 

168  Van  Valkenburgh  v.  American  "°  National   Fraternity  v.   Karnes 

Ins.'  Co.,  70  N.  Y.  605  (1877).  (Tex.    Civ.    App.),    60    S.    W.    576 

""Insurance  Co.  v.  Foley,  105  U.  (1901). 

S.  350   (1881);   disapproving  Thorn-  m  Mengel    v.    Northwestern,    etc., 

son  v.   Weems,    L.   R.    9   App.   Gas.  Ins.  Co.,  176  Pa.  St.  280,  35  Atl.  197 

671   (1884),  where  it  was  said  that  (1896). 

"temperate  in  habits"   is  a  phrase  m  Union,  etc.,  Ins.  Co.  v.  Reif ,  36 

to  be   interpreted,   and  though  not  Ohio  St.  596,  Woodruff  Ins.  Gas.  295 

to  be  taken  in  a  Pythagorean  sense  (1881). 
as   total    abstinence,    yet   seems   to 


421  STIPULATIONS    OF    LIFE    INSURANCE   POLICY.  :<    :;;.*, 

intoxicated,  whether  daily  and  continuously  or  periodically,  with 
sober  intervals  of  greater  or  less  length,  a  person  addicted  to  such 
habit  can  not  be  said  to  be  of  temperate  habits  within  the  meaning 
of  this  policy.  *  *  *  The  habit  of  using  intoxicating  liquors  to 
excess  is  the  result  of  indulging  a  natural  or  acquired  appetite  by 
continued  use  until  it  becomes  a  customary  practice.  This  habit 
may  manifest  itself  in  practice  by  daily  or  periodical  intoxication 
or  drunkenness.  Within  the  purview  of  these  questions  it  must  have 
existed  at  some  previous  time  or  at  the  date  of  the  application.  It 
is  not  essential  to  its  existence  that  it  should  be  continuously  prac- 
ticed, or  that  the  insured  should  be  daily  and  habitually  under  the 
influence  of  liquor.  Where  the  general  habits  of  the  man  are  either 
abstemious  or  temperate,  an  occasional  indulgence  to  excess  does  not 
make  him  a  man  of  intemperate  habits,  but  if  the  habit  is  formed 
of  drinking  to  excess,  and  the  appetite  for  liquor  is  indulged  to  in- 
toxication, either  constantly  or  periodically,  no  one  may  claim  that 
his  habits  are  temperate  though  he  may  be  sober  for  longer  or  shorter 
periods  in  the  intervals  between  the  times  of  his  debauches." 

§  375.  Health  and  freedom  from  disease. — A  statement  that  the 
applicant  is  in  "good  health"  means  that  he  is  free  from  disease  or 
ailments  which  affect  the  general  healthfulness  of  his  system,  and 
not  from  mere  indisposition,  which  does  not  tend  to  undermine  or 
weaken  his  constitution.173  The  applicant  is  not  required  to  know 
and  state  with  absolute  certainty  his  physical  condition  or  his  predis- 
position to  different  diseases,  and  it  is  sufficient  that  he  in  good 
faith  discloses  fully  all  that  he  knows  about  his  past  and  present 
health.174  Hence,  a  statement  that  a  person  is  in  good  health,  made 
in  an  application  for  reinstatement  of  a  lapsed  policy,  does  not 
mean  that  his  health  is  absolutely  perfect;  but  means  that  it  was 
practically  the  same  as  it  was  when  the  policy  was  issued.175  Sound 
health  means  freedom  from  disease  or  ailment  which  affects  the 
general  soundness  or  healthfulness  of  the  system  seriously,  and  the 
word  "serious"  is  not  generally  used  to  describe  a  dangerous  condi- 
tion, but  rather  a  grave,  important  or  weighty  trouble.176 

173  Plumb   v.   Penn,   etc.,   Ins.   Co.,        176  Massachusetts,     etc.,     Ass'n     v. 
108  'Mich.  94,  65  N.  W.  611    (1895).     Robinson,  104  Ga.  256,  30  S.  E.  918, 

174  Endowment  Rank  v.  Cogbill,  99     42  L.  R.  A.  261   (1898). 

Tenn.  28,  41  S.  W.  340  (1897);  ""Brown  v.  Metropolitan  L.  Ins. 
Moulor  v.  American  L.  Ins.  Co.,  Ill  Co.,  65  Mich.  306,  32  N.  W.  610 
U.  S.  335  (1884).  (1887);  Metropolitan  L.  Ins.  Co.  v. 


§    375  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  422 

A  temporary  indisposition  such  as  an  ordinary  cold  is  not  an  ill- 
ness within  the  meaning  of  that  word  as  used  in  an  application  for  a 
policy.177  A  man  who  has  a  cold,  on  account  of  which  he  is  in  bed, 
may  be  in  good  health  within  the  meaning  of  such  a  clause,  and  this 
is  not  affected  by  the  fact  that  he  was  taken  with  pneumonia  and 
died  a  few  days  after  the  premium  was  paid.178  Where  the  applicant, 
in  answer  to  a  question  whether  he  had  ever  had  any  "illness,  local  dis- 
ease, injury,  mental  or  nervous  disease,  or  infirmity,  or  ever  had  any 
disease  or  weakness  of  the  head,  throat,  heart,  lungs,  stomach,  kidneys, 
bladder,  or  any  disease  or  infirmity  whatever/'  answered  "No,"  it 
was  held  not  untrue,  although  a  year  before  he  had  been  treated  by  a 
physician  while  insensible  from  the  influence  of  chloroform,  pre- 
sumably taken  with  suicidal  intent.179  A  failure  of  the  applicant  to 
state,  in  reply  to  a  question  as  to  when  and  for  what  diseases  he  has 
consulted  a  physician,  that  he  had  taken  the  Keeley  cure  for  alcoholism 
is  not  a  misrepresentation,  as  drunkenness  is  not  a  disease  within  the 
meaning  of  this  inquiry.180 

A  statement  in  the  application  that  the  applicant  since  childhood 
had  not  had  the  disease  or  disorder  of  spitting  of  blood  is  material, 
and  invalidates  the  policy  where  it  appears  that  within  a  year  prior 
to  the  application  he  had  a  hemorrhage,  in  regard  to  which  he  con- 
sulted a  physician.181  So,  where  the  applicant  stated  that  he  had 
never  had  kidney  disease  and  had  not  been  attended  by  a  physician 
within  two  years,  and  proofs  of  death  were  made  by  a  physician, 
wherein  it  was  stated  that  he  had  attended  the  assured  for  acute 
kidney  disease  and  that  he  had  died  of  Bright's  disease,  and  the 
proofs  were  by  the  contract  made  evidence  against  the  insured,  it  was 
held  that  the  falsity  of  the  answers  was  established,  and  that  there 
could  be  no  recovery.182  So,  where  the  applicant  stated  that  he  had 
been  in  good  health,  with  the  exception  of  having  had  yellow  fever 
seven  or  eight  years  before,  and  that  he  had  no  physician  and  had 

Howie,   62   Ohio   St.   204,   56   N.   E.  18°  Supreme      Lodge      v.      Taylor 

908   (1900).  (Ala.),  24  So.  247  (1898). 

177  Billings  v.  Metropolitan  L.  Ins  181  Smith     v.    Northwestern,     etc., 
Co.,  70  Vt.  477,  41  Atl.  516    (1898).  Ins.  Co.,  196  Pa.  St.  314,  46  Atl.  426 

178  Barnes  v.  Fidelity,  etc.,  Ass'n,  (1900). 

191  Pa.  St.  618,  45  L.  R.  A.  264,  43  182  Trudden  v.  Metropolitan  L.  Ins. 

Atl.  341  (1899).  Co.,  64  N.  Y.  Supp.  183,  50  App.  Div. 

179  Mutual,   etc.,  Ass'n  v.   Farmer,  (N.  Y.)  473   (1900). 
65  Ark.  581,  47  S.  W.  850  (1898). 


423  STIPULATIONS    OF   LIFE   INSURANCE   POLICY.  §    375 

never  been  an  inmate  of  any  infirmary  or  hospital,  and  that  he  had 
never  had  any  illness  or  ailment  of  any  kind,  it  was  held  that  there 
could  be  no  recovery  where  it  appeared  that  prior  to  the  application 
the  applicant  was  subject  to  fits,  that  he  had  been  an  inmate  of  two 
different  hospitals,  and  had  suffered  from  a  severe  gunshot  wound.188 
So,  where  the  applicant  stated  that  he  had  never  had  any  serious  ill- 
ness, and  it  appeared  that  two  months  before  he  made  the  applica- 
tion he  had  a  severe  attack  of  typhoid  fever,  the  policy  was  held  in- 
valid, although  there  was  opinion  evidence  to  the  effect  that  for  "life 
insurance  purposes  typhoid  fever  is  not  a  dangerous  disease."184 

It  is  difficult  to  give  any  precise  definition  of  the  word  "health."  As 
said  in  New  York :  "It  is  a  relative  term.  It  refers  to  the  condition 
of  the  body.  Thus,  it  is  frequently  characterized  as  perfect,  as  good, 
as  indifferent,  and  as  bad.  The  epithet  'good'  is  comparative.  It 
'does  not  require  absolute  perfection.  When,  therefore,  one  is  de- 
scribed as  being  in  good  health,  that  does  not  necessarily  or  ordinarily 
mean  that  he  is  absolutely  free  from  all  and  every  ill  that  flesh  is 
heir  to.  If  the  phrase  should  be  so  interpreted  as  to  require  entire 
exemption  from  physical  ills,  the  number  to  whom  it  would  be 
strictly  applicable  would  be  very  inconsiderable.  In  applying  terms 
somewhat  indefinite,  reference  should  be  had  to  the  business  to  which 
they  relate.  This  rule  is  very  necessary  when  construing  a  language 
which  like  ours  is  defective  in  precision.  The  most  important  ques- 
tion on  applications  for  life  insurance  is  whether  the  proponent  is 
exempt  from  any  dangerous  disease,  one  which  frequently  terminates 
fatally.  It  is  not  usually  deemed  an  objection  that  one  has  some 
slight  physical  disturbance  of  which  in  all  human  probability  he  will 
soon  be  relieved,  although  it  might  possibly  lead  to  a  fatal  disease.  A 
slight  difficulty,  such  as  the  sting  of  a  bee,  a  boil,  or  a  common  cold, 
has  sometimes  induced  complaints  which  have  shortened  human  life; 
but  this  result  is  so  infrequent  and  improbable  that  the  mere  pos- 
sibility is  disregarded  in  the  business  of  life  insurance."185 

A  person  may  be  in  good  health  although  he  has  a  touch  of  dys- 
pepsia.186 A  disorder  or  congestion  of  the  liver  is  not  necessarily  a 

183Petitpain  v.  Mutual  Ass'n,  52  18°  Peacock  v.  New  York  L.  Ins. 

La.  Ann.  503,  27  So.  113  (1900).  Co.,  20  N.  Y.  293  (1859). 

184  Meyers  v.  Woodmen,  etc.,  193  186  Morrison  v.  Wisconsin,  etc., 

Pa.  St.  470,  44  Atl.  563  (1899).  Ins.  Co.,  59  Wis.  162  (1884). 


§    376  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  424 

disease  of  the  liver.187     Questions  of  this  character  should  be  left  for 
the  jury  to  determine.188 

A  policy  is  invalid  where  it  appears  that  it  was  issued  while  the 
insured  was  dangerously  ill  from  appendicitis,  and  the  premium  was 
paid  by  his  private  secretary,  who  intentionally  concealed  the  fact 
of  such  illness  from  the  officers  of  the  company  and  stated  that  the 
insured  was  away  and  had  left  funds  with  which  to  pay  the  pre- 
mium.189 

§  376.  Bodily  injuries. — Where  the  applicant  stated :  "I  have 
never  been  physically  injured,"  the  court  said:  "The  reasonable  in- 
terpretation of  the  clause  is  that  the  decedent  was  at  the  time  free 
from  serious  physical  injury,  and  that  any  injuries  he  may  have  suf- 
fered from  in  the  course  of  his  previous  life  had  disappeared  and  left 
no  trace  behind  that  would  render  him  an  unfit  subject  for  accident 
insurance;  that  he  was,  as  to  such  accidents  and  their  results,  free 
from  bodily  ailments/'190 

Where  the  applicant  falsely  stated  that  there  was  nothing  in  his 
physical  condition  tending  to  shorten  life  which  was  not  in  the  ap- 
plication, while  as  a  matter  of  fact  his  shoulder  was  in  a  serious 
condition  as  a  result  of  a  gunshot  wound  and  an  operation,  which  had 
not  been  disclosed,  the  company  was  held  not  estopped  from  relying 
upon  this  false  statement  by  the  fact  that  the  applicant  called  the 
agent's  attention  to  the  arm  and  showed  his  use  thereof.191 

Where  the  applicant  was  asked,  "Have  you  ever  had  any  difficulty 
with  your  head  or  brain?"  and  answered,  "No,"  it  was  held  that  the 
question  called  for  a  functional  or  organic  derangement,  and  did  not 
require  the  disclosure  of  the  fact  that  he  had  been  subject  to  periodic 
headaches.192 

§  377.  Medical  attendance. — A  false  statement  with  reference  to 
having  consulted  a  medical  attendant  invalidates  the  policy.193  If 

18TCushman   v.    United    States    L.  tin,    133    Ind.    376,    33    N.    E.    105 

Ins.  Co.,  70  N.  Y.  72  (1877).  (1893). 

188  Mutual,  etc.,  Ins.  Co.  v.  Daviess,  m  National   Fraternity  v.   Karnes 
87  Ky.  541  (1888).  (Tex.    Civ.    App.),    60    S.    W.    576 

189  Equitable  L.  Assur.  Soc.  v.  Me-  (1901). 

Elroy,  83  Fed.  631,  28  C.  C.  A.  365        m  Higbie   v.    Guardian,   etc.,    Ins. 
(1897).      '  Co.,  53  N.  Y.  603   (1873). 

190  Standard,  etc.,  Ins.  Co.  v.  Mar-        193  Phillips  v.  New  York,  etc.,  Ins. 

Co.,  9  N.  Y.  Supp.  836    (1890). 


425  STIPULATIONS   OF    LIFE   INSURANCE    POLICY.  §    378 

the  insured  has  been  attended  by  a  physician  within  the  prescribed 
time  it  is  his  duty  to  state  the  fact  to  the  company,  as  it  is  entitled 
to  know  for  what  cause  he  had  medical  advice,  and  the  name  and 
address  of  the  physician  consulted  in  order  that  it  may  make  further 
inquiries  from  him  with  reference  to  the  physical  condition  of  the 
applicant.194  A  statement  with  reference  to  having  consulted  a 
physician  is  material  to  the  risk  within  the  meaning  of  a  statute 
which  provides  that  the  falsity  of  a  statement  in  the  application  for 
life  insurance  shall  be  no  defense  to  an  action  on  the  policy  unless  it 
is  material  to  the  risk.195 

The  question  refers  to  a  consultation  about  some  substantial  injury 
or  ailment,  and  not  concerning  a  slight  and  temporary  indisposi- 
tion.190 Thus,  consulting  a  physician  for  a  cold  is  not  a  breach  of 
the  condition  that  the  insured  has  not  been  under  the  care  of  a  physi- 
cian for  two  years.197  So,  calling  at  a  physician's  office  for  medicine 
to  relieve  a  temporary  indisposition,  or  calling  at  the  house  of  a 
physician  for  the  same  purpose,  is  not  a  breach  of  a  warranty  that  the 
applicant  has  not  consulted  a  physician  since  childhood  except  for 
the  measles.198  "If  the  insured  went  to  a  physician  for  the  purpose 
of  getting  his  aid,  advice  or  assistance  as  a  physician  for  a  difficulty 
under  which  he  was  then  suffering,  or  supposed  himself  to  be  suffering, 
and  the  physician,  hearing  what  the  insured  had  to  say,  as  a  physi- 
cian, for  the  purpose  of  relief  or  aid  or  cure  or  assistance,  gave  to 
the  insured  medicine,  then  it  might  be  said  that  the  said  physician 
prescribed  for  him."199 

An  applicant  was  asked,  "How  long  since  you  have  consulted  a 
physician?"  and  answered,  "Five  years."  It  appeared  that  he  had 
consulted  a  physician  the  previous  year,  and  it  was  held  insufficient 
to  establish  the  falsity  of  the  answer,  as  the  question  was  ambiguous.200 

§  378.  Family  relationship. — The  insurance  company  is  entitled 
to  have  correct  answers  given  to  questions  with  reference  to  the  family 

194  United    Brethren,    etc.,    Soc.    v.  19T  Metropolitan     L.     Ins.     Co.     v. 
O'Hara,  120  Pa.  St.  256,  13  Atl.  932  Larson,  85  111.  App.  143   (1899). 
(1888).  1M  Billings  v.  Metropolitan  L.  Ins. 

195  Fidelity,     etc.,     Ass'n     v.     Me-  Co.,  70  Vt.  477,  41  Atl.  516    (1898). 
Daniel,  25   Ind.  App.  608,  57  N.  E.  19°  Cobb   v.    Covenant,   etc.,   Ass'n, 
645   (1900).  153  Mass.  176  (1891). 

198Hubbard  v.  Mutual,  etc.,  Ass'n,  20°  Stewart  v.  Equitable,  etc., 
100  Fed.  719,  40  C.  C.  A.  665  (1900).  Ass'n,  110  Iowa  528,  81  N.  W.  782 

(1899). 


§    379  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  426 

relationships  of  the  applicant,  and  a  false  statement  with  reference 
thereto  will  invalidate  the  policy.  Thus,  a  false  statement  that  the 
applicant  is  a  widower,201  or  that  he  is  a  single  man,202  will  render 
the  policy  void,  although  a  statement  that  the  person  named  as  bene- 
ficiary is  a  cousin  of  the  applicant  is  immaterial.203  The  applicant 
is  often  asked  as  to  the  cause  of  the  death  of  deceased  members-  of 
his  family,  and  as  the  cause  of  death  is  often  a  mere  matter  of  opin- 
ion, about  which  even  physicians  may  differ,  an  untrue  statement 
with  reference  to  the  same  will  not  invalidate  the  policy  when  made 
in  good  faith.204  So,  a  statement  by  the  applicant  to  a  medical  ex- 
aminer of  the  insurance  company  that  he  had  no  dead  brother  was 
construed  to  be  a  representation  which  would  not  invalidate  the  policy 
in  the  absence  of  fraud  or  intentional  misstatement,  although  the 
application  signed  by  him  stated  that  the  answers  were  warranted 
to  be  true.205 

§  379.  Other  insurance. — A  false  answer  in  response  to  a  question 
as  to  other  insurance  will  invalidate  a  policy.208  The  only  ques- 
tion which  is  liable  to  arise  in  reference  to  other  insurance  in  con- 
nection with  life  insurance  contracts  is  whether  it  includes  certifi- 
cates in  mutual  benefit  associations.  On  this  the  authorities  are 
conflicting.  In  some  states  it  has  been  held  that  such  associations 
are  insurance  companies,  and  their  contracts  are  properly  termed 
policies,  and  hence  constitute  other  insurance.207  In  others  such 
associations  are  not  treated  as  insurance  companies,  but  belong  to  a 
recognized  class  of  organizations  known  as  benevolent  associations.208 

201  United    Brethren,    etc.,    Soc.   v.  N.  W.  4    (1888);    Co-operative,  etc., 
White,  100  Pa.  St.  12  (1882).  Ins.  Order  v.  Lewis,  12  Lea  (Tenn.) 

202  Jeffries  v.  Life  Ins.  Co.,  22  Wall.  136    (1883);    Presbyterian,  etc.,  As- 
(U.  S.)  47   (1874).  sur.  Fund  v.  Allen,  106  Ind.  593,  7 

""Britten  v.  Supreme  Council,  46  N.  E.  317  (1886);  Sherman  v.  Com., 

N.  J.  Eq.  102  (1889).  82  Ky.  102  (1884);  Commonwealth 

204 Knights  of  Honor  v.  Dickson,  v.  Wetherbee,  105  Mass.  149  (1870). 
102  Tenn.  255,  52  S.  W.  862  (1899).  20S  Masonic  Aid  Ass'n  v.  Jones,  154 

208  Globe,  etc.,  Ins/  Co.  v.  Wagner,  Pa.  St.  99,  26  Atl.  253  (1893);  Com- 

188  111.  133,  58  N.  E.  970  (1900).  monwealth  v.  Equitable  Ben.  Ass'n, 

See  §  108a,  supra.  137  Pa.  St.  412,  18  Atl.  1112  (1890); 

200  Clapp  v.  Massachusetts  Ben.  Lithgow  v.  Supreme  Tent,  etc.,  165 

Ass'n,  146  Mass.  519  (1888);  Bruce  Pa.  St.  292,  30  Atl.  830  (1895); 

v.  Connecticut,  etc.,  Ins.  Co.,  74  Theobald  v.  Supreme  Lodge,  etc.,  59 

Minn.  310  (1898).  Mo.  App.  87  (1894). 

207  State  v.  Nichols,  78  Iowa  747,  41 


427  STIPULATIONS    OF   LIFE    INSURANCE    POLICY.  §    380 

The  circuit  court  of  appeals,  in  considering  this  question,  said:208 
"It  will  be  conceded  that  these  associations,  which  are  primarily  for 
social  and  charitable  purposes  and  for  securing  efficient  mutual  aid 
among  their  members,  are  not  usually  described  as  insurance  com- 
panies. That  the  certificate  which  they  issue  to  a  member,  insuring 
upon  certain  conditions  the  payment  of  a  sum  certain  to  a  member's 
representatives  on  his  death,  has  much  resemblance  in  form,  purpose 
and  effect  to  an  insurance  policy  is  true ;  and  if  we  were  called  upon  to 
give  the  application  a  wide  and  liberal  construction  in  favor  of  the 
insurance  company,  we  might  properly  hold  that  the  language  em- 
braces in  its  scope  every  association  or  individual  contracting  to  pay 
money  to  one's  representatives  in  the  event  of  his  death.  Such  con- 
struction might  be  warranted  by  the  probable  purpose  of  the  question 
to  enable  the  company  to  judge  how  great  a  motive  his  life  insurance 
would  furnish  the  applicant  for  self-destruction  or  fraudulent  simu- 
lation of  death.  But  we  are  considering  a  contract  and  application 
drawn  with  great  nicety  by  an  insurance  company  and  framed  with 
the  sole  purpose  of  eliciting  from  the  insured  full  information  of  all 
circumstances  which  the  company's  long  experience  has  led  it  to  be- 
lieve to  be  valuable  in  calculating  the  risk.  We  can  not  presume  the 
company  to  have  been  ignorant  of  the  fact  that  large  numbers  of  per- 
sons have  taken  out  life  insurance  in  mutual  benefit  associations 
which  are  not  ordinarily  described  as  insiirance  companies,  and  that 
doubt  has  often  arisen  whether  the  contracts  they  is^ue  are  properly 
or  technically  described  as  life  insurance  at  all.210  Having  in  view  the 
well  established  rule  that  insurance  contracts  •  are  to  be  construed 
against  those  who  frame  them  and  that  any  doubt  or  ambiguity  in 
them  is  to  be  resolved  in  favor  of  the  insured,  we  conclude  that  a 
certificate  in  a  mutual  benefit  and  social  society  was  not  within  the 
description  'policy  of  life  insurance  in  any  other  company.'  * 

§  380.  Rejection  of  former  application. — Insurance  companies 
often  ask  whether  the  applicant  has' previously  applied  for  insurance 
in  any  other  company  and  been  rejected.  A  party  signed  an  appli- 
cation for  life  insurance,  and  after  the  medical  examination  was  sub- 
stantially completed  refused  to  comply  with  certain  physical  tests 
which  were  required.  The  company  thereupon  rejected  his  applica- 

209  Penn,  etc.,  Ins.  Co.  v.  Mechanics'        21°  Continental  L.  Ins.  Co.  v.  Cham- 
Sav.,  etc.,  Co.,  72  Fed.  413,  19  C.  C.     berlain,  132  U.  S.  304  (1889). 
A.  286  (1896). 


§    380  LIFE,   ACCIDENT   AND    INDEMNITY    INSURANCE.  428 

tion  and  notified  him  of  the  fact  by  mail.  Subsequently  he  applied 
to  another  company  for  insurance,  and,  in  answer  to  a  question,  stated 
that  he  had  not  formally  made  a  proposal  or  application  to  any  com- 
pany, .agent,  or  association,  on  which  a  policy  had  not  been  issued. 
It  was  held  that  this  answer  was  substantially  and  technically  false 
and  avoided  the  policy.211 

A  person  applied  to  an  agent  of  an  insurance  company  for  insur- 
ance upon  his  life,  filled  up  and  signed  an  application  which  the 
agent  was  authorized  to  reduce  to  writing.  The  agent  and  the  appli- 
cant then  went  to  the  office  of  the  medical  examiner,  but,  not  finding- 
him  in,  no  examination  was  made.  The  agent  subsequently  went  to 
the  medical  examiner  alone  with  the  application,  which  had  been 
delivered  to  him,  and  was  advised  by  the  examiner  that,  having  at- 
tended the  applicant  professionally,  he  was  aware  that  the  applicant 
was  not  insurable,  and  that  it  was  useless  to  examine  him.  The  ap- 
plication, which  had  been  reduced  to  writing  by  the  agent,  was  there- 
upon destroyed.  It  was  held  that  these  facts  established  conclusively 
that  an  application  for  insurance  had  been  made  within  the  purview 
of  a  question  propounded  by  another  company  to  the  same  person 
subsequently  applying  for  insurance,  as  to  whether  an  application 
for  insurance  had  ever  been  made  by  him  to  any  other  company.212 

The  organization  known  as  the  Royal  Arcanum  is  an  "association'' 
within  the  meaning  of  the  word  as  used  in  the  question,  "Has  any 
company  or  association  ever  declined  or  postponed  granting  or  re- 
viving insurance  on  your  life,  either  for  any  particular  amount  or  in 
any  particular  form?"213 

Where  the  applicant  was  asked  the  question,  "Has  an  examining 
physician  for  a  life  insurance  company  or  order  declined  to  recom- 
mend your  application?"  and  answered,  "No,"  it  was  held  that  the 
false  statement  invalidated  the  policy.214 

211  Security,  etc.,  Ins.  Co.  v.  Webb,  213  Bruce  v.  Connecticut,  etc.,  Ins. 
106    Fed.     808,     45     C.     C.     A.     648  Co.,    74    Minn.    310,    77    N.    W.    210 
(1901).  (1899),  and  cases  therein  cited. 

212  Edington  v.  ^tna  L.  Ins.  Co.,  2U  Finch  v.  Modern  Woodmen,  113 
77  N.  Y.  564   (1879),  100  N.  Y.  536,  Mich.  646,  71  N.  W.  1104  (1897). 

3  N.  E.  315   (1885). 


CHAPTER  XV. 


ACCIDENT    INSURANCE. 


SEC. 

390.  In  general. 

391.  Definition  of  accident. 

I.  Construction     of    Provisions     of 

Policy. 

392.  External,  violent,  or  accidental 

injuries. 

393.  Risks  of  travel. 

394.  Inhaling  gas — Poison. 

395.  Occupation  or  employment. 

396.  External  signs. 

II.  Excepted  Risks. 

397.  Effect  of  negligence. 


SEC. 
398. 


Voluntary  exposure  to  unneces- 
sary dangers. 

399.  Bodily  infirmity  or  disease. 

400.  Injuries  intentionally  inflicted 

by  others. 

401.  Injuries  received  while  engaged 

in  violation  of  law. 

402.  Injuries  received  while  intoxi- 

cated. 

777.  General  Provisions. 

403.  Amount    of    recovery — Disabil- 

ity. 

404.  Construction — Effect  of  existing 

judicial  decisions. 

§  390.  In  general. — The  lack  of  uniformity  in  accident  insurance 
policies  and  the  great  number  of  conditions  and  limitations  with  which 
they  are  at  present  incumbered  renders  it  impracticable  to  arrange 
the  matter  of  this  chapter  under  the  provisions  of  a  model  form. 

§  391.  Definition  of  accident. — "Accidental"  means  happening  by 
chance;  unexpectedly  taking  place;  not  according  to  the  usual  course 
of  things,  or  not  as  expected.1  It  includes  any  unusual  or  unexpected 
result  which  attends  the  performance  of  a  usual  act.2  Thus,  within 


1  Lovelace  v.  Travelers'  Protect. 
Ass'n,  126  Mo.  104,  28  S.  W. 
877,  30  L.  R.  A.  209,  Woodruff 
Ins.  Gas.  270  (1894);  United  States, 
etc.,  Ass'n  v.  Barry,  131  U.  S. 
100  (1888);  Paul  v.  Travelers' 
Ins.  Co.,  112  N.  Y.  472,  8  Am. 
St.  766  (1889),  and  note;  Richards 
v.  Travelers'  Ins.  Co.,  89  Cal.  170 
(1891);  North  American,  etc.,  Ins. 
Co.  v.  Burroughs,  69  Pa.  St.  43 
(1871).  A  snowstorm  is  not  an 


"accident":  Fenwick  v.  Schmalz,  L. 
R.  3  C.  P.  313  (1868).  Injuries 
received  in  a  fight  in  which  the  in- 
sured engaged  without  fault  on  his 
part  are  "accidental":  Supreme 
Council  v.  Garrigus,  104  Ind.  133, 
3  N.  E.  818  (1885). 

2  Providence  L.,  etc.,  Co.  v.  Mar- 
tin, 32  Md.  310  (1869);  Western, 
etc.,  Ass'n  v.  Smith,  85  Fed.  401,  29 
C.  C.  A.  223  (1898). 


(429) 


392 


LIFE,    ACCIDENT   AND    INDEMNITY    INSURANCE. 


430 


the  definition  of  an  accident  are  included  the  following : — A  rupture 
of  a  blood  vessel  while  exercising  with  indian  clubs  ;3  an  unintentional 
taking  of  poison;4  a  sprain  caused  by  lifting  a  heavy  weight;5  an  in- 
jury resulting  from  jumping  from  the  platform  of  a  train  under  cir- 
cumstances which  would  justify  a  person  in  assuming  that  no  harm 
would  result;6  suicide  while  insane;7  death  by  hanging  at  the  hands 
of  a  mob;8  injuries  from  an  assault  which  the  insured  was  not  ex- 
pecting and  did  nothing  to  induce;9  injuries  intentionally  inflicted 
by  another.10 

The  accident  must  be  the  proximate  and  sole  cause  of  the  injury 
or  there  can  be  no  recovery.11 


I.     Construction  of  Provisions  of  Policy. 

§  392.  External,  violent,  or  accidental  injuries. — A  policy  insuring 
against  death  or  accident  caused  by  "external,  violent  or  accidental 
means"  covers  death  by  stumbling  and  falling  against  a  locomotive 
engine;12  a  fall  due  to  a  temporary  and  unexpected  physical  dis- 


3  McCarthy  v.  Travelers'  Ins.  Co., 
8  Biss.  (U.  S.)  362  (1878). 

*  Healey  v.  Mutual  Ace.  Ass'n,  133 
111.  556,  9  L.  R.  A.  371  (1890); 
Mutual,  etc.,  Ass'n  v.  Tuggle,  39  111. 
App.  509  (1890). 

5  Martin  v.  Travelers'  Ins.  Co.,  1 
F.  &  F.  505  (1859).  Policies  some- 
times exempt  the  company  from 
liability  when  the  injury  is  caused 
by  voluntary  overexertion.  For  con- 
struction of  this  provision,  see 
Rustin  v.  Standard,  etc.,  Ins.  Co., 
58  Neb.  792,  79  N.  W.  712,  Woodruff 
Ins.  Gas.  294  (1899);  Metropolitan, 
etc.,  Ass'n  v.  Bristol,  69  111.  App. 
492  (1896);  Reynolds  v.  Equitable 
Ace.  Ass'n,  49  Hun  (N.  Y.)  605 
(1888). 

8  United  States,  etc.,  Ass'n  v. 
Barry,  131  U.  S.  100  (1888).  But 
see  Southard  v.  Railway,  etc.,  Assur. 
Co.,  34  Conn.  574  (1868). 

7  Blackstone  v.  Standard,  etc.,  Ins. 
Co.,  74  Mich.  592,  3  L.  R.  A.  486 


(1889);     Mutual,    etc.,    Ins.    Co.    v. 
Daviess,  87  Ky.  541    (1888). 

8  Fidelity,  etc.,  Co.  v.  Johnson,  72 
Miss.  333,  17  So.  2,  30  L.  R.  A.  206 
(1894). 

9  Phelan  v.  Travelers'  Ins.  Co.,  38 
Mo.  App.  640  (1890). 

10  See  §  400,  infra. 

11  Freeman     v.     Mercantile,     etc., 
Ass'n,  156  Mass.  351,  Woodruff  Ins. 
Gas.  282,  17  L.  R.  A.  753  (1892),  and 
note  on  Proximate  Cause  of  Death 
within   the   Meaning  of  a   Life   In- 
surance   Policy.     See,    also,    Manu- 
facturers' Ace.   Indem.  Co.  v.   Dor- 
gan,     58     Fed.     945,     7     C.     C.     A. 
581,     22     L.     R.     A.     620      (1893); 
Western,    etc.,    Ass'n   v.    South,    85 
Fed.   401,    29   C.   C.   A.   223    (1898); 
Martin  v.  Manufacturers',  etc.,  Co., 
151  N.  Y.  94,  45  N.  E.  377   (1896). 

"Equitable  Ace.  Ins.  Co.  v.  Os- 
born,  90  Ala.  201,  9  So.  869,  13  L.  R. 
A.  267  (1890). 


431 


ACCIDENT    INSURANCE. 


392 


order;13  an  accidental  strain  causing  death;14  a  blow  struck  by  an- 
other person;15  death  due  to  excitement  and  strain  caused  by  at- 
tempting to  hold  and  control  a  frightened  and  runaway  team;16 
death  caused  by  accidental  drowning;17  death  caused  by  drowning 
while  attempting  to  rescue  the  crew  of  a  wrecked  ship,  where  it  ap- 
peared that  there  was  a  bruise  over  the  left  temple;18  a  rupture 
caused  by  jumping  from  a  train  ;19  choking  to  death  while  attempting 
to  swallow  a  piece  of  beefsteak  ;20  injury  caused  by  the  sting  of  an  in- 
sect ;21  hanging  at  the  hands  of  a  mob  ;22  death  by  inhaling  gas  while 
working  in  a  well  ;23  blood  poisoning,  caused  by  an  abrasion  of  the  skin 
of  a  toe  by  a  new  shoe  ;24  lockjaw  produced  by  a  gunshot  accidentally 
inflicted  upon  the  insured  by  himself.25  But  a  rupture  caused  by  the 
insured  jumping  from  a  train,  where  he  acted  for  his  own  convenience, 
and  not  under  any  necessity,  was  held  not  within  the  conditions  of  an 
accident  policy  insuring  against  injury  caused  by  "violent  or  external 
means."26  So,  sunstroke  contracted  in  the  course  of  the  ordinary 
duties  of  an  architect  is  a  disease,  and  not  an  accident  caused  by  "ex- 
ternal, violent  or  accidental  means."27  A  policy  provided  that  "in- 
surance under  this  policy  shall  extend  only  to  physical  and  bodily 


"Meyer  v.  Fidelity,  etc.,  Co.,  96 
Iowa  378,  65  N.  W.  328  (1895). 

14  North  American,  etc.,  Ins.  Co.  v. 
Burroughs,  69  Pa.  St.  43  (1871). 

16  Richards  v.  Travelers'  Ins.  Co., 
89  Cal.  170,  26  Pac.  762,  23  Am.  St. 
455    (1891). 

10  McGlinchey  v.  Fidelity,  etc., 
Co.,  80  Me.  251,  14  Atl.  13  (1889). 

17  Manufacturers',  etc.,  Indem.  Co. 
v.  Dorgan,  58  Fed.  945,  7  C.  C.  A. 
581     (1893);     Mallory  v.  Travelers' 
Ins.   Co.,   47   N.  Y.   52,   7  Am.  Rep. 
410   (1871);   Tucker  v.  Mutual  Ben. 
Life  Co.,  121  N.  Y.  718   (1890);   De 
Van  v.  Commercial,  etc.,  Ass'n,  92 
Hun   (N.  Y.)   256   (1895),  157  N.  Y. 
690,  51  N.  B.  1090   (1898);   Trew  v. 
Railway,  etc.,  Assur.  Co.,  6  Hurl.  & 
N.  838   (1861);   United  States,  etc., 
Ass'n  v.  Hubbell,  56  Ohio  St.  516,  47 
N.  E.  544,  40  L.  R.  A.  453  (1897). 

"Tucker  v.  Mutual  Ben.  Life  Co., 
121  N.  Y.  718,  24  N.  E.  1102  (1888). 


19  Travelers'    Ins.   Co.   v.   Murray, 
16  Colo.  296,  26  Pac.  774  (1891). 

20  American   Ace.    Co.   v.   Reigart, 
94  Ky.  547,  23  S    W.  191,  21  L.  R. 
A.  651  (1893). 

J1Omberg  v.  United  States,  etc., 
Ass'n,  19  Ky.  L.  462,  40  S.  W.  909 
(1897). 

22  Fidelity,  etc.,  Co.  v.  Johnson,  72 
Miss.  333,  17  So.  2,  30  L.  R.  A.  206 
(1894). 

23Pickett  v.  Pacific,  etc.,  Ins.  Co., 
144  Pa.  St.  79,  22  Atl.  871,  13  L.  R.  A. 
661  (1891);  Paul  v.  Travelers'  Ins. 
Co.,  112  N.  Y.  472,  20  N.  E.  347,  3 
L.  R.  A.  443  (1889). 

"Western,  etc.,  Ass'n  v.  Smith, 
85  Fed.  401,  29  C.  C.  A.  223  (1898). 

25  Travelers'  Ins.  Co.  v.  Melick,  65 
Fed.  178,  12  C.  C.  A.  544  (1894). 

26  Southard   v.   Railway,   etc.,   As- 
sur. Co.,  34  Conn.  574  (1868). 

27  Dozier  v.  Fidelity  &  Cas.  Co.,  46 
Fed.  446  (1891). 


§    393  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  432 

injuries  resulting  in  disability  or  death  *  *  *  solely  by  reason 
of  and  through  external,  violent  and  accidental  means  within  the 
terms  and  conditions  of  this  contract,  and  which  shall,  independently 
of  all  other  causes  immediately,  wholly,  totally  and  continuously 
from  the  date  of  the  accident  causing  the  injury,  disable  the  insured. 
If  any  injury  causing  disability  or  death  entitling  the  insured  to  claim 
benefits  under  the  provisions  of  this  policy  be  caused  or  contributed 
t0  *  *  *  by  anv  sunstroke  or  freezing  while  in  the  line  of  his 
duty  as  a  railroad  employe  *  *  *  then,  in  such  case,  the  limit 
of  the  association's  liability  shall  be  one-fourth  of  the  sum  otherwise 
payable."  It  was  held  that  under  this  limitation  a  sunstroke  re- 
ceived while  in  the  line  of  his  employment  was  covered  by  the  policy.28 

§  393.  Risks  of  travel. — Policies  sometimes  insure  against  acci- 
dents "while  actually  traveling  in  a  public  conveyance,"  and  while 
complying  with  the  rules  and  regulations  of  the  carrier.  Such  a 
policy  covers  an  accident  which  occurs  while  the  insured  is  getting 
on  or  off  a  train,  either  at  an  intermediate  station,  where  he  left  the 
car  temporarily,  or  at  his  destination.29  A  party  accepting  a  policy 
which  plainly  limits  the  risk  to  that  of  a  common  carrier's  public 
conveyances  can  not  recover  for  injuries  received  while  caring  for 
and  selling  horses  which  he  was  taking  to  market,  although  the  agent 
of  the  company  instructed  him  that  the  policy  would  cover  such 
risks.30  But  the  company  is  presumed  to  issue  its  policy  with  a 
knowledge  of  the  ordinary  customs  of  the  business  in  which  the  in- 
sured is  engaged.  Hence,  a  cattle  dealer  who  receives  a  policy  which 
permits  him  to  care  for  his  cattle  in  transit  on  trains  may  show 
that  at  the  time  of  the  injury  he  was  engaged  in  doing  what  was 
customary  among  cattle  dealers.31  A  party  who  is  insured  against 
"accident  while  traveling  by  public  or  private  conveyance,  provided 
for  the  transportation  of  passengers,"  can  recover  for  an  injury  sus- 
tained while  going  on  foot  from  a  steamboat  landing  to  the  railway 
station  for  the  purpose  of  continuing  his  journey.32  But  a  person 
who  had  left  the  landing  place  of  a  steamer  and  was  injured  while 

29  Railway,  etc.,  Ass'n  v.  Johnson,        31  Pacific,  etc.,  Ins.  Co.  v.  Snowden, 
22  Ky.  L.  759,  58  S.  W.  694,  52  L.  R.     58  Fed.  342,  7  C.  C.  A.  264  (1893). 
A.  401  (1900).  32Northrup  v.  Railway  Pass.,  etc., 

""Tooley  v.  Railway,  etc.,  Assur.  Co.,  43  N.  Y.  516,  3  Am.  Rep.  724 
Co.,  3  Biss.  (U.  S.)  399  (1873).  (1871). 

30  Fidelity,  etc.,  Co.  v.  Teter,  136 
Ind.  672,  36  N.  E.  283  (1894).- 


433 


ACCIDENT    INSURANCE. 


§  394 


walking  home,  a  distance  of  about  eight  miles,  was  not  traveling  by  a 
"public  or  private  conveyance  at  the  time  of  the  injury."33 

§  394.  Inhaling  gas — Poison. — Under  a  policy  which  contains  a 
provision  that  the  liability  of  the  company  shall  not  extend  to  any 
death  or  disability  which  may  have  been  caused  "by  the  taking  of 
poisonous  substances,  or  the  inhaling  of  gas,  or  by  any  surgical  opera- 
tion or  medical  treatment,"  the  company  is  not  liable  for  death 
caused  by  a  voluntary  and  intelligent  act  on  the  part  of  the  insured, 
as  distinguished  from  one  which  was  unconscious i  and  in  that  sense 
involuntary.  An  insurance  company  was  therefore  held  liable  under 
such  a  policy  where  the  insured  was  asphyxiated  by  illuminating  gas 
which  he  unconsciously,  involuntarily  and  accidentally  inhaled  while 
asleep  in  his  room  at  a  hotel.34 

Death  caused  by  the  poisonous  sting  of  an  insect  is  not  within  a 
clause  exempting  the  company  from  liability  for  injuries  caused  by 
"poison  in  any  form/'  or  "by  contact  with  poisonous  substances."35 
Death  resulting  from  the  shock  caused  by  swallowing  aqua  ammonia 
results  from  taking  poison.36  Under  a  policy  insuring  against  "the 
effects  of  injury  to  the  body  caused  by  external,  violent  or  accidental 
means,"  but  excepting  liability  for  death  caused  by  poison,  the  in- 
surer is  liable  when  death  is  caused  by  poison  accidentally  taken  by 
the  insured.37 


33  Ripley  v.  Insurance  Co.,  16  Wall. 
(U.  S.)  336  (1872). 

84  Paul  v.  Travelers'  Ins.  Co.,  112 
N.  Y.  472,  20  N.  B.  347  (1889); 
Bacon  v.  United  States,  etc.,  Ace. 
Ass'n,  123  N.  Y.  304,  25  N.  E.  399 
(1890);  Menneiley  v.  Employers', 
etc.,  Assur.  Corp.,  148  N.  Y.  596,  43 
N.  E.  54  (1896);  Pickett  v.  Pacific 
Ins.  Co.,  144  Pa.  St.  79,  22  Atl.  871, 
Woodruff  Ins.  Gas.  290  (1890);  Fi- 
delity, etc.,  Co.  v.  Waterman,  59  111. 
App.  297  (1895);  affirmed  161  111. 
632,  44  N.  E.  283  (1896).  See,  also, 
Fidelity,  etc.,  Co.  v.  Lowenstein,  97 
Fed.  17,  38  C.  C.  A.  29  (1899). 
Contra,  on  the  general  proposition, 
see  McGlother  v.  Provident,  etc., 
28 — ELLIOTT  INS. 


Ace.  Co.,  89  Fed.  685,  32  C.  C.  A. 
318  (1898);  Early  v.  Standard,  etc., 
Ins.  Co.,  113  Mich.  58,  71  N.  W.  500 
(1897). 

^Omberg  v.  United  States,  etc., 
Ass'n,  19  Ky.  L.  462,  40  S.  W.  909 
(1897). 

3U  Early  v.  Standard,  etc.,  Co.,  113 
Mich.  58,  71  N.  W.  500  (1897). 

37  Early  v.  Standard,  etc.,  Ins.  Co., 
113  Mich.  58,  71  N.  W.  500  (1897); 
Travelers'  Ins.  Co.  v.  Dunlap,  160 
111.  642,  43  N.  E.  765,  Woodruff  Ins. 
Cas.  287  (1896),  and  cases  cited; 
Metropolitan  Ace.  Ass'n  v.  Froiland, 
161  111.  30,  43  N.  E.  766  (1896).  See 
Pollock  v.  United  States,  etc.,  Ass'n, 
102  Pa.  St.  230  (1883). 


§    394  LIFE,,   ACCIDENT   AND   INDEMNITY   INSURANCE.  434 

Where  the  policy  contained  a  statement:  "I  agree  that  this  instru- 
ment shall  not  be  held  to  extend     *     *     *     to  poison  in  any  way 
taken,   administered,   absorbed,   or  inhaled,"   it  was   held  that  the' 
words  "in  any  way"  related  to  the  mode  or  manner  in  which  the 
poison  was  taken,  and  not  to  the  motive  of  the  insured  in  taking  it.38 

In  a  recent  case  in  Wisconsin,39  the  policy  in  suit  excepted  "in- 
juries, fatal  or  otherwise,  resulting  wholly  or  in  part  from  poison,  or 
anything  accidentally  or  otherwise  taken,  administered,  absorbed, 
or  inhaled."  The  insured  died  from  blood  poisoning  resulting  from 
the  treatment  of  a  wound  caused  by  extracting  a  tooth.  It  was  said 
that  there  was  no  reason  for  extending  the  rule  that  death  caused 
by  inhaling  gas  accidentally  or  otherwise  only  covers  cases  of  volun- 
tary, conscious  inhalation.  "Certainly  no  good  reason  can  be  given 
for  extending  it  to  cases  of  accidental  taking  or  absorption  of  poison- 
ous substances  into  the  system  through  the  voluntary  use  for  remedial 
purposes  of  some  other  substance.  In  the  instances  cited,  the  word 
'inhaled'  and  the  word  'taken/  in  view  of  the  other  language  used  in 
the  contract,  were  easily  construed  to  contemplate  voluntary,  conscious 
action,  not  in  the  sense  that  the  victim  should  know  the  precise 
nature  of  the  substance  that  he  was  taking  or  inhaling,  and  its  effect 
on  his  system,  but  that  the  taking  should  be  by  his  own  act  or  per- 
mission. Here,  the  cotton  was  placed  in  the  mouth  of  the  deceased 

38  Metropolitan  Ace.  Ass'n  v.  Froi-  death    of    the    member,     Froiland, 

land,    161    111.    30,    43    N.    E.    766  having  been  caused  by  accident,  is 

(1896).   The  court  said :    "Very  near-  not  excluded  from  the  risks  covered 

ly    this    precise    language    was    so  by  the  contract  of  insurance   sued 

construed  in  Connecticut,  etc.,  Ins.  on  by  reason  of  the  exception  above 

Co.  v.  Akens,  150  U.  S.  468   (1893).  mentioned.        Insurance      contracts 

It  was  there  held  that  in  the  phrase  are  to  be  liberally  construed  so  as 

'self-destruction    in    any    form'    the  not  to  defeat  the  indemnity  which, 

words  'in  any  form'  clearly  related  in  making  the  contract,  was  the  ob- 

to  the  manner  of  killing,  and  that  ject   to   be   secured,    unless   plainly 

the   clause   was  by  no  means  syn-  necessary  from  the  language  of  the 

onymous    in    meaning    with    such  contract." 

phrases  as  'die  by  suicide,  sane  or  39  Kasten    v.    Interstate    Gas.    Co., 

insane,'  or  by  'suicide,  felonious  or  99  Wis.  73,  74  N.  W.  534,  40  L.  R.  A. 

otherwise,  sane  or  insane.'     In  ac-  651  (1898);  Early  v.  Standard,  etc., 

cordance  with  the  ruling  in  Trav-  Ins.  Co.,  113  Mich.  58,  71  N.  W.  500 

elers'   Ins.   Co.   v.   Dunlap,   160    111.  (1897);  Westmoreland  v.  Preferred, 

642,     43     N.     E.     765     (1896),     and  etc.,    Ins.    Co.,    75    Fed.    244    (1896) 

Healey   v.   Mutual   Ace.   Ass'n,    133  [when   the   insured   died   from   the 

111.  556,  25  N.  E.  52  (1890),  we  must  effects  of  chloroform], 
hold   in   the   case   at  bar   that   the 


435  ACCIDENT    INSURANCE.  §    395 

by  his  own  permission.  True,  the  fact  that  it  contained  germs  which 
propagated  and  evolved  the  poison  which  was  absorbed  into  the  blood 
with  fatal  effects  was  unknown  and  accidental,  but  that  was  within 
the  express  terms  of  the  exception  under  consideration." 

§  395.  Occupation  or  employment. — The  ordinary  accident  policy 
insures  the  party  against  accident  while  he  is  occupied  or  employed 
as  described  in  the  contract.  All  occupations  are  not  subject  to  the 
same  risks,  and  some  are  so  hazardous  as  to  render  it  impossible  for 
the  parties  engaged  in  them  to  procure  accident  insurance.  The  in- 
surance companies  classify  the  various  occupations  and  arrange  their 
premium  rates  in  accordance  with  the  hazard  involved.  Where  the 
contract  provides  that  if  the  insured  is  injured  in  any  occupation 
rated  by  the  company  as  more  hazardous  than  that  given  by  the  insured 
as  his  occupation,  the  insurance  shall  only  be  what  the  premium  paid 
would  purchase  at  the  rate  fixed  by  the  tables  for  the  increased  hazard, 
the  jury  must  determine  whether  there  has  been  any  increase  in  the 
risk.40 

Where  the  insured  gave  his  occupation  as  that  of  a  blacksmith 
employed  by  a  railroad  company,  and  it  appeared  that  he  also  acted 
as  a  switchman  and  car-coupler,  which  occupation  was  classed  as  a 
more  hazardous  one,  he  was  allowed  to  recover  the  amount  the  pre- 
mium paid  would  have  secured  in  the  more  hazardous  occupation.41 

A  mere  occasional  act  not  strictly  within  the  scope  of  the  stated  oc- 
cupation is  not  engaging  in  another  occupation.  Such  provisions 
refer  to  classes  of  occupations  and  not  to  particular  acts.  Thus, 
one  who  is  insured  as  a  "grocer  with  desk  and  counter  duties"  may 
hunt  for  pleasure  without  being  held  to  have  engaged  in  the  occupa- 
tion of  a  hunter.42  So,  a  person  insured  as  a  mining  expert  does 
not  become  an  engineer  or  fireman  by  casually  riding  on  an  engine.48 
A  farmer  may  drive  piles  in  the  construction  of  a  private  bridge  with- 
out engaging  in  the  occupation  of  a  piledriver.44  A  banker  does 

"Standard,  etc.,  Ins.  Co.  v.  Mar-  Sibley,    57    111.    App.    315     (1894); 

tin,    133    Ind.    376,    33    N.    E.    105  Kentucky,  etc.,  Ins.  Co.  v.  Franklin 

(1893).     See  §  373,  supra.  (Ky.),  43  S.  W.  709  (1897). 

"Standard    L.,    etc.,    Ins.    Co.    v.  « Berliner  v.   Travelers'   Ins.  Co., 

Taylor,    12   Tex.   Civ.   App.   386,    34  121  Cal.  458,  53  Pac.  918,  41  L.  R.  A. 

S.  W.  781   (1896).  467    (1898). 

42  Union,    etc.,    Ass'n   v.    Frohard,  "  National,  etc.,  Society  v.  Taylor, 

134  111.  228,  25  N.  E.  642,  10  L.  R.  A.  42  111.  App.  97  (1892). 
383    (1890);    Star   Accident   Co.    v. 


§    396  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  436 

not  change  his  employment  to  that  of  a  sawyer  hy  operating  a  saw 
to  cut  some  pieces  of  lumber  while  he  is  in  a  sawmill  for  the  purpose 
of  getting  some  boards  to  make  a  table  to  use  in  his  bank.45 

But  it  seems  that  operating  a  buzz-saw  for  his  own  amusement  is 
not  within  the  permissible  pleasures  of  one  who  states  his  occupation 
to  be  that  of  "retired  gentleman."46 

Where  the  insured  is  engaged  in  a  designated  employment,  and  the 
policy  provides  that  the  company  shall  not  be  liable  for  accidents  while 
engaged  in  a  more  hazardous  employment,  it  is  for  the  jury  to  deter- 
mine whether  a  certain  employment  is  more  hazardous  than  another.47 

§  396.  External  signs. — A  provision  to  the  effect- that  there  shall 
be  no  liability  for  injuries  which  produce  no  external  and  visible 
signs  does  not  apply  to  injuries  which  result  in  death.48  Under  such 
a  provision  the  insured  was  allowed  to  recover  for  injury  caused  by  a 
strain  which  produced  no  external  result  until  some  time  after  the 
accident.49  A  nosebleed  is  an  external  and  visible  sign  of  injury.50 
Where  artificial  respiration  practiced  upon  a  dead  body  brought 
forth  illuminating  gas,  it  was  treated  as  an  external  or  visible  mark 
of  an  accident.51  So,  where  water  ran  from  the  mouth  of  a  dead  body, 
which  was  taken  from  a  river,  it  was  held  that  there  were  external 
and  visible  signs  of  drowning.52 

48  Hess    v.    Preferred,  etc.,  Ass'n,  v.  United  States  Gas.  Co.,  34  N.  J. 

112  Mich.  196,  70  N.  W.  460,  40  L.  L.  371  (1871). 

R.  A.  444   (1897).     A  teacher  who,  48  McGlinchey  v.  Fidelity,  etc.,  Co., 

while    out   of    employment,    causes  80  Me.  251,  14  Atl.  13,  Woodruff  Ins. 

two  dwelling  houses  to  be  erected  Cas.    277     (1888);     Eggenberger    v. 

does  not  become  a  "builder:"   Stone  Guarantee,  etc.,  Ass'n,  41  Fed.  172 

v.  United  States  Cas.  Co.,  34  N.  J.  L.  (1889). 

371    (1871).     See,   also,   Grattan   v.  49  Pennington  v.  Pacific,  etc.,  Ins. 

Metropolitan,  etc.,  Ins.  Co.,  80  N.  Y.  Co.,    85    Iowa    468,    52    N.    W.    482 

281   (1880);  Dwight  v.  Germania  L.  (1892). 

Ins.  Co.,  103  N.  Y.  341  (1886);  North  ^Whitehouse    v.    Travelers'    Ins. 

American,    etc.,    Ins.    Co.    v.    Bur-  Co.,  Fed.  Cas.  No.  175,666,  7  Ins.  L. 

roughs,  69  Pa.  St.  43  (1871).  J.  23  (1877). 

48  Knapp  v.  Preferred,  etc.,  Ass'n,  51  Menneiley    v.    Employers',    etc., 

53  Hun  (N.  Y.)  84  (1889).  Assur.  Corp.,  148  N.  Y.  596,  43  N.  B. 

47  Eggenberger  v.  Guarantee,  etc.,  54,  31  L.  R.  A.  686  (1896). 

Ass'n,  41  Fed.  172  (1890).     For  defl-  B2Wehle    v.    United    States,    etc., 

nition  of  "employment,"   see  Stone  Ass'n,   63   N.  Y.   St.   464,   31   N.   Y. 

Supp.  865  (1895). 


437  ACCIDENT   INSURANCE.  §    397 

II.     Excepted  Risks. 

§  397.    Effect  of  negligence.— Unless  excepted  by  the  terms  of  the 

policy,  the  insured  is  entitled  to  recover  where  the  accident  was 
caused  by  his  own  negligence.53  But  policies  ordinarily  provide  that 
the  company  shall  not  be  liable  unless  the  insured  exercises  due  care 
for  his  personal  protection.  Under  such  a  provision  he  is  bound  to 
exercise  that  degree  of  care  which  an  ordinarily  prudent  man  would 
use  under  the  same  circumstances.54 

The  insured  was  not  allowed  to  recover  where  the  policy  contained 
such  a  provision,  and  it  appeared  that  he  was  thrown  from  the  plat- 
form of  a  passenger  coach,  where  he  was  standing  in  violation  of  a 
known  rule  of  the  carrier.55 

§  398.  Voluntary  exposure  to  unnecessary  dangers. — Accident  pol- 
icies commonly  exempt  the  insurer  from  liability  for  death  or  injury 
caused  by  voluntary  exposure  to  unnecessary  danger,  or  hazards,  or 
perilous  adventure.  This  means  wanton  or  grossly  imprudent  ex- 
posure.56 In  an  English  case  it  was  said:57  "Two  classes  of  acci- 
dents are  excluded  from  the  risks  insured  against;  viz.: 

"(1)  Accidents  which  arise  from  exposure  by  the  insured  to  risk 
of  injury,  which  risk  is  obvious  at  the  time  he  exposes  himself  to  it. 

"(2)  Accidents  which  arise  from  an  exposure  by  the  insured  to  risk 
of  injury  where  the  risk  would  be  obvious  to  him  at  the  time  if  he 
were  paying  reasonable  attention  to  what  he  was  doing." 

The  phrase  "voluntary  exposure  to  unnecessary  danger"  means 
intentional  exposure  to  a  danger;  as  where  a  person  acts  so  reck- 
lessly and  carelessly  as  to  show  an  utter  disregard  of  known  danger, 
or  does  an  act  in  the  face  of  a  risk  and  danger  so  obvious  that  a  pru- 

63  Schneider  v.   Provident  L.   Ins.     v.  United  States  Gas.  Co.,  34  N.  J. 
Co.,    24    Wis.    28,    I    Am.    Rep.    157     L.  371   (1871). 

(1869);     Wilson    v.     Northwestern,  ^Bon  v.  Railway,  etc.,  Assur.  Co., 

etc.,  Ass'n,  53  Minn.  470,  55  N.  W.  56  Iowa  664,  10  N.  W.  225,  41  Am. 

626    (1893).  Rep.  127  (1881). 

64  Tuttle  v.  Travelers'  Ins.  Co.,  134  M  Manufacturers',  etc.,  Indem.  Co. 
Mass.  175,  45  Am.  Rep.  316   (1883);  v.  Dorgan,  58  Fed.  945,  7  C.  C.  A. 
Duncan  v.  Preferred,  etc.,  Ass'n,  13  581  (1893). 

N.  Y.  Supp.  620  (1891);  Kentucky  "Cornish  v.  .Accident  Ins.  Co.,  L. 
L.,  etc.,  Ins.  Co.  v.  Franklin,  19  Ky.  R.  23  Q.  B.  D.  453  (1889)  [insured 
L.  1573,  43  S.  W.  709  (1897);  Stone  was  killed  while  attempting  to  cross 

a  railway  track]. 


398 


LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE. 


438 


dent  man,  exercising  reasonable  foresight,  would  not  have  done  it.58 
It  means  dangers  recognized,  but  consciously  and  intentionally  as- 
sumed.59 A  policy  containing  such  a  provision  does  not  relieve  the 
company  from  liability  for  injury  which  resulted  from  a  voluntary 
exposure  to  a  danger  which  was  contemplated  by  the  contract.60  A 
party  who  goes  out  in  a  boat  on  a  dark  night  to  fish,  without  a  knowl- 
edge of  the  existence  of  snags  which  are  dangerous  to  his  boat,  does 
not  expose  himself  to  unnecessary  danger  within  the  meaning  of  such 
provision.61  Nor  does  a  person  voluntarily  expose  himself  to  danger 
by  riding  in  a  bicycle  race  and  overexerting  himself  ;62  nor  by  cleaning 
a  gun,  without  the  knowledge  that  it  was  defective  and  loaded;63  nor 
by  visiting  a  house  of  ill  fame  and  getting  shot  immediately  after 
leaving  the  place;64  nor,  generally,  by  doing  what  a  man  of  ordinary 
prudence  would  do  under  the  same  circumstances;65  as  by  climbing 
a  bank  with  a  loaded  gun  in  his  hand,  while  hunting.67  But  there  can 
be  no  recovery  under  such  a  policy  for  an  accident  occasioned  by 
jumping  from  a  moving  train  after  it  has  passed  the  station;68  or 
by  attempting  to  cross  through  a  freight  train  standing  across  the 
highway  ;69  or  by  attempting  to  lower  himself  from  a  window  to  avoid 
police  officers  who  were  at  the  door.70  A  person  who,  with  packages  in 


M  De  Loy  v.  Travelers'  Ins.  Co., 
171  Pa.  St.  1,  32  Atl.  1108  (1895); 
Johnson  v.  London  Guar.,  etc.,  Co., 
115  Mich.  86,  72  N.  W.  1115,  40  L.  R. 
A.  440  (1895);  Manufacturers',  etc., 
Indem.  Co.  v.  Dorgan,  58  Fed.  945,  7 
C.  C.  A.  581,  22  L.  R.  A.  620  (1897). 

59  Travelers'  Ins.  Co.  v.  Randolph, 
78  Fed.  754,  24  C.  C.  A.  305  (1897); 
Ashenfelter  v.  Employers',  etc.,  As- 
sur.  Corp.,  87  Fed.  682,  31  C.  C.  A. 
193  (1898). 

60  Wilson    v.    Northwestern,    etc., 
Ass'n,   53  Minn.  470,  55  N.  W.  626 
(1893). 

81  Collins  v.  Bankers'  Ace.  Ins.  Co., 
96  Iowa  216,  64  N.  W.  778  (1895). 

^Keeffe  v.  National  Ace.  Soc.,  4 
App.  Div.  (N.  Y.)  392  (1896). 

83  Miller  v.  American,  etc.,  Ins.  Co., 
92  Tenn.  167,  21  S.  W.  39,  20  L.  R. 
A.  765  (1893). 

64  Jones    v.    United     States,    etc., 


Ass'n,   92   Iowa   652,    61   N.   W.   485 
(1894). 

65  Shevlin  v.  American,  etc.,  Ass'n, 
94  Wis.  180,  68  N.  W.  866,  36  L.  R. 
A.  52  (1896). 

67  Cornwell      v.      Fraternal      Ace. 
Ass'n,  6  N.  Dak.  201,  69  N.  W.  191, 
40  L.  R.  A.  437  (1896). 

68  Smith  v.  Preferred,  etc.,  Ass'n, 
104  Mich.  634,  62  N.  W.  990   (1895). 

69  Bean  v.  Employers',  etc.,  Assur. 
Corp.,  50  Mo.  App.  459   (1892).    One 
who   attempted   to   cross  the   track 
between  the  cars  of  a  freight  train, 
when  he  saw  the  men  in  the  places 
where  they  would  he  if  the  train  was 
about  to  start,  voluntarily  exposed 
himself     to     unnecessary     danger: 
Willard  v.  Masonic,  etc.,  Ass'n,  169 
Mass.  288,  47  N.  E.  1006  (1897). 

70  Shaffer    v.    Travelers'    Ins.    Co. 
(111.),  22  N.  E.  589  (1889). 


439  ACCIDENT   INSURANCE.  §    398 

his  hands,  attempts  to  cross  over  a  trestle  which  he  knows  is  danger- 
ous, while  there  are  other  ways  of  travel  open  to  him,  voluntarily 
exposes  himself  to  unnecessary  danger.71  But  it  can  not  be  said,  as 
a  matter  of  law,  that  a  person  voluntarily  exposes  himself  to  unneces- 
sary danger  by  crossing  a  railroad  trestle  bridge,  where  there  is  a 
plank  walk  and  a  fence  railing  on  one  side.72  Whether  standing  on 
the  platform  of  a  moving  train  which  is  going  at  a  rapid  speed  is  a 
voluntary  exposure  to  a  known  danger,  is  a  question  for  the  jury.73 
Whether,  under  all  the  circumstances,  going  on  a  railroad  track 
or  bridge  is  a  voluntary  exposure  to  unnecessary  danger,  is  a  question 
of  fact  which  should  be  submitted  to  the  jury.74 

Force  must  be  given  to  the  word  "unnecessary"  as  qualifying  "dan- 
ger." An  attempt  of  a  traveling  man  to  get  on  a  train  which  is -already 
in  motion  is  not,  as  a  matter  of  law,  a  voluntary  exposure  to  an  un- 
necessary danger.75  The  term  "voluntary  exposure"  does  not  mean 
simply  that  the  act  of  attempting  to  get  on  board  of  a  moving  train 
was  voluntarily  or  was  consciously  or  'intentionally  performed,  but 
also  that  the  insured  was  conscious  of  the  danger  to  which  he  was 
thus  exposing  himself,  and  voluntarily  assumed  it,  or  that  the  dan- 
ger was  so  apparent  that  a  man  of  ordinary  intelligence  would,  under 
such  circumstances,  have  known  it.  As  was  said  by  the  court: 
"Mere  failure  to  observe  ordinary  care  would  not,  as  in  an  action 
for  negligence,  defeat  a  recovery  on  the  contract.  *  *  *  For 
one  to  leap  into  a  turbulent  stream,  rush  into  a  burning  building, 
or  to  do  any  other  hazardous  thing  to  save  human  life,  would  be  a 
voluntary  exposure  to  danger,  but  not  to  unnecessary  danger.  So, 
too,  many  emergencies  in  the  lives  of  men  occur,  where  the  most 
urgent  necessity  requires  their  presence  at  some  particular  place,  at 
some  particular  time,  and  where  to  miss  a  train  would  involve  serious 
consequences.  In  such  cases  the  voluntary  exposure  to  danger  might 
not  be  unnecessary;  as,  the  presence  of  a  physician  or  surgeon  at 

71  Travelers'  Ins.  Co.  v.  Jones,  80  74  Keene    v.    New    England,    etc., 

Ga.  541,  7  S.  E.  83,  12  Am.  St.  270  Ass'n,  161  Mass.  149,  36  N.  E.  891 

(1888).  (1894).     See,  also,  Tuttle  v.  Trav- 

"Follis    v.    United     States,    etc.,  elers'    Ins.    Co.,    134    Mass.    175,    45 

Ass'n,  94  Iowa  435,   62  N.  W.  807,  Am.   Rep.  316    (1883);    Freeman  v. 

27  L.  R.  A.  78   (1895).  Travelers'  Ins.  Co.,   144  Mass.   572, 

"Travelers'  Ins.  Co.  v.  Randolph,  12  N.  E.  372  (1887) ;  Travelers',  etc., 

78  Fed.  754,  24  C.  C.  A.  305   (1897).  Ace.  Ass'n  v.  Stone,  50  111.  App.  222 

See  Standard,  etc.,  Ins.  Co.  v.  Thorn-  (1893). 

ton,  100  Fed.   582,  40  C.  C.  A.   564  7S  Fidelity,  etc.,  Co.  v.  Sittig,  181 

(1900).  111.  HI,  48  L.  R.  A.  359   (1900). 


§    399  LIFE,   ACCIDENT   AND    INDEMNITY   INSURANCE.  440 

some  critical  period  in  the  illness  or  injury  of  a  human  being  might 
be  necessary  to  save  human  life,  and  it  might  be  necessary  for  him 
to  expose  himself  to  danger  to  reach  his  patient,  or  in  some  other 
respect  to  perform  his  professional  duty.  The  necessity  implied  in 
the  provision  of  the  policy  does  not  mean  only  that  which  is  unavoid- 
able and  inevitable,  but  also  any  object  or  purpose  which  men  of 
moral  responsibility  and  prudence  would  regard  as  of  such  serious 
importance  in  the  performance  of  duty  as  to  demand  or  justify  the 
incurring  of  risk  or  danger  to  accomplish  it."  A  complaint  alleging 
that  the  insured  at  the  time  of  his  death  was  seining  in  a  river  which 
was  very  swift  and  full  of  holes,  and  that  the  insured,  while  so  en- 
gaged, fell  into  one  of  said  holes,  and,  being  unable  to  swim,  was 
drowned,  is  good  as  against  a  demurrer.76  Where  the  insured,  while 
asleep  and  unconscious,  walked  off  the  platform  of  a  car  and  was 
killed,  it  was  held  not  a  case  of  "voluntary  exposure,  design  or  self- 
inflicted  injuries."77 

§  399.  Bodily  infirmity  or  disease. — These  words,  as  used  in  an 
accident  policy  to  exempt  the  insurer  from  liability  for  injuries  re- 
sulting from  bodily  infirmity  or  disease,  mean  practically  the  same 
thing.  Where  the  policy  insured  against  accidental  injury  or  death 
through  external,  violent  or  accidental  means,  and  provided  that  it 
should  not  cover  "injuries,  fatal  or  otherwise,  *  *  *  resulting 
directly  or  indirectly  from  intoxicants  *  *  *  or  any  disease  or 
bodily  infirmity"  it  appeared  that  the  defendant  was  subject  to  fits 
when  he  was  insured,  and  it  was  claimed  that  his  death  was  due  to 
disease  or  bodily  infirmity.  In  stating  the  meaning  of  these  words, 
the  court  said:78  "When  speaking  of  infirmity  we  generally  mean 
a  state  or  quality  of  being  infirm,  physically  or  otherwise,  debility  or 
weakness;  and  by  the  use  of  the  word  'disease'  we  desire  to  convey 
the  impression  of  the  morbid,  resulting  from  some  functional  dis- 
turbance or  failure  of  physical  functions  which  tends  to  undermine 
the  constitution.  We  do  not,  as  a  general  rule,  apply  either  term 
to  a  slight  and  temporary  disorder,  or  to  the  imperfect  working  of 
some  function,  which  is  over  in  a  short  period  of  time,  and  which, 
when  recovered  from,  leaves  the  body  in  its  normal  condition.  In 
using  either  of  the  words  we  do  not,  as  a  rule,  refer  to  a  slight  and 

76  Conboy   v.   Railway,   etc.,   Ass'n        78  Meyer  v.   Fidelity,  etc.,  Co.,   96 
(Ind.  App.),  43  N.  E.  1017    (1896).     Iowa  378,  65  N.  W.  328  (1895). 

77  Scheiderer  v.  Travelers'  Ins.  Co., 
58  Wis.  13  (1883). 


441  ACCIDENT    INSURANCE. 

mere  temporary  disturbance  or  enfeeblement.  If  this  is  true  of  our 
ordinary  speaking  and  writing  it  is  clear  that  the  words  should  be 
given  no  broader  meaning  when  we  find  them  used  by  an  insurance 
company  in  a  clause  of  its  policy  which  it  relies  upon  to  defeat  a 
recovery  thereon." 

In  a  case  in  the  circuit  court  of  appeals  the  words  were  given  the 
same  meaning.  "In  a  broad,  generic  sense/'  said  Taft,  J.,70  "any 
temporary  trouble  by  reason  of  which  a  man  loses  consciousness  is  a 
disease.  It  is  a  condition  of  the  body  not  normal,  and  produced  by 
the  imperfect  working  of  some  function,  but  as  the  imperfect  working 
is  not  permanent  and  the  body  returns  at  once,  or  in  a  short  period 
of  time,  to  its  normal  condition,  it  does  not  rise  to  the  dignity  of  a 
disease.  A  fainting  spell  produced  by  indigestion  or  lack  of  proper 
food  for  a  number  of  hours,  or  for  any  cause  which  would  not  indi- 
cate disease  in  the  body,  but  would  show  mere  temporary  disturbance 
or  enfeeblement,  would  not  come  within  the  meaning  of  the  words 
'disease  or  bodily  infirmity,'  as  used  in  this  policy." 

Sunstroke  is  a  disease,  and  not  an  accident.80 

Death  caused  by  a  malignant  pustule  resulting  from  contact  of  the 
body  with  putrid  animal  matter  is  death  by  disease,  and  not  accident.81 

§  400.  Injuries  intentionally  inflicted  by  others. — A  policy  which 
insures  against  accidents  covers  an  injury  intentionally  inflicted  upon 
the  insured  by  a  third  person,  unless  such  risk  is  expressly  excepted.82 
"While  our  preconceived  notion  of  the  term  'accident'  would  hardly 
lead  us  to  speak  of  the  intentional  killing  of  a  person  as  accidental 

79  Manufacturers',  etc.,  Indem.  Co.        82  Travelers'  Ins.  Co.  v.  McConkey, 

v.  Dorgan,  58  Fed.  945,  7  C.  C.  A.  127  U.  S.  661  (1888);  Supreme  Coun- 

581   (1893).     See,  also,  Pudritzky  v.  cil  v.  Garrigus,  104  Ind.  133,  54  Am. 

Supreme  Lodge,  76  Mich.  428,  43  N.  Rep.  298  (1885);  Hutchcraft  v.  Trav- 

W.  373  (1889);  Mutual,  etc.,  Ins.  Co.  elers'  Ins.  Co.,  87  Ky.  300    (1888); 

v.  Daviess,  87  Ky.  541,  9  S.  W.  812  Fidelity,    etc.,    Co.    v.    Johnson,    72 

(1888).  Miss.  333,  30  L.  R.   A.   206    (1895), 

""Dozier  v.  Fidelity,  etc.,   Co.,  46  annotated;    Lovelace    v.    Travelers' 

Fed.   446    (1891);    Sinclair  v.   Mari-  Prot.  Ass'n,  126  Mo.  104,  47  Am.  St. 

time,  etc.,  Co.,  3  El.  &  El.  478  (1861).  638,  30  L.  R.  A.  209  (1894);  Collins 

81  Bacon  v.  United  States,  etc.,  Ace.  v.   Fidelity,   etc.,   Co.,   63   Mo.  App. 

Ass'n,  123  N.  Y.  304,  9  L.  R.  A.  617  253    (1895);    American   Ace.   Co.   v. 

(1890).    As  to  disease  caused  by  ac-  Carson,   99  Ky.  441,  36   S.  W.  169, 

cident,   see   Freeman  v.   Mercantile  34  L.  R.  A.  301  (1895). 
&  Ace.  Ass'n,  156  Mass.  351,  17  L.  R. 
A.  753   (1892). 


§    400  LIFE,   ACCIDEXT   AND   INDEMNITY    INSURANCE.  44:2 

killing,  yet  no  doubt  can  now  remain,  in  view  of  the  precedents  es- 
tablished by  all  the  courts,  that  the  word  'intentional'  refers  alone  to 
the  person  inflicting  the  injury,  and  if,  as  to  the  person  injured,  the 
injury  was  unforeseen,  unexpected,  not  brought  about  through  his 
agency  designedly,  or  was  without  his  foresight,  or  was  a  casualty 
or  mishap  not  intended  to  befall  him,  then  the  occurrence  was  ac- 
cidental and  the  injury  one  inflicted  by  accidental  means,  within  the 
meaning  of  such  policies/"83  It  is  customary,  however,,  to  insert  a 
provision  exempting  the  company  from  liability  for  injuries  inten- 
tionally inflicted  upon  the  insured  by  others.  The  exemption  is 
limited  to  such  injuries  as  are  intentional ;  hence  the  insurer  is  liable 
where  the  injury  was  inflicted  by  an  insane  person  who  was  incapable 
of  forming  an  intent.84  So,  the  insurer  is  liable  for  injuries  caused 
by  a  blow  struck  by  a  person  who  did  not  intend  to  kill  the  insured.85 
Where  the  insured  was  shot  by  an  officer,  who  had  no  intention  of 
killing  him,  it  was  held  that  it  could  not  be  said,  as  a  matter  of 
law,  that  the  insured  lost  his  life  through  the  design  of  another.86 

Where  the  policy  provided  that  there  could  be  no  recovery  for  in- 
juries caused  by  fighting,  it  was  held  that  there  could  be  no  recovery, 
although  the  insured  was  not  the  aggressor.87  There  is  no  liability 
where  the  insured  was  intentionally  shot  and  killed  by  another  per- 
son;88 as,  where  the  insured  was  waylaid  and  shot  by  robbers;89  al- 

83  American  Ace.  Co.  v.  Carson,  99  am   v.    Equitable   Ace.    Ins.    Co.,    87 
Ky.  441,  34  L.  R.  A.  301,   36   S.   W.  Ga.   497,   13   S.   E.   752,   13   L.   R.   A. 
169    (1895).     See  Button   v.  Ameri-  838    (1891).     See  Accident  Ins.   Co. 
can,  etc.,  Ace.  Ass'n,  92  Wis.  83,  53  v.  Bennett,  90  Tenn.   256,  16  S.  W. 
Am.  St.  900  (1896).  723   (1891). 

84  Corley  v.  Travelers',  etc.,  Ass'n,  **  Jones  v.  United  States,  etc.,  Ace. 
105  Fed.  854,  46  C.  C.  A.  278  (1900);  Ass'n,   92   Iowa   652,    61   N.   W.   485 
Berger  v.  Pacific,  etc.,  Ins.  Co.,  88  (1894);    Fischer   v.    Travelers'   Ins. 
Fed.  241    (1898).  Co.,  77  Cal.  246,  19  Pac.  425,  1  L.  R. 

85  Richards  v.  Travelers'  Ins.  Co.,  A.  572  (1888);  Travelers'  Ins.  Co.  v. 
89  Cal.  170,  26  Pac.  762,  23  Am.  St.  McCarthy,  15  Colo.  351,  25  Pac.  713, 
455   (1891).  11  L.  R.  A.  297   (1890). 

86  Utter  v.  Travelers'  Ins.  Co.,  65  *»  Railway,     etc.,     Ace.     Ass'n     v. 
Mich.  545,  32  N.  W.  812,  8  Am.  St.  Drummond,  56  Neb.  235,  76  N.  W. 
913   (1887).  562    (1897);    Hutchcraft   v.    Travel- 

87  United  States,  etc.,  Ass'n  v.  Mil-  ers'  Ins.  Co.,  87  Ky.  300,  8  S.  W.  570, 
lard,  43  111.  App.  148   (1892).     It  is  12  Am.  St.  484   (1888).     A  recovery 
immaterial  whether  the  person  by  was  denied  because,  while  the  kill- 
whom  the  insured   was  killed  was  ing  was  accidental  within  the  mean- 
sane  or  insane,  if  the  insured  volun-  ing  of  these  words,  "external,  vio- 
tarily  engaged  in  the  fight:     Gresh-  lent  and  accidental,"  as  used  on  the 


443  ACCIDENT   INSURANCE.  §    401 

though,  in  the  absence  of  such  a  limiting  clause,  death  by  such  means 
would  be  considered  an  accident.90  Where  the  policy  provided  that 
"$4,000  shall  be  paid  in  case  of  death  by  accident,"  and  that  in 
case  of  death  "by  natural  causes,"  the  insured  should  be  entitled  to 
$100,  the  beneficiary  was  allowed  to  recover  for  injuries  received  by 
the  insured  in  a  fight  in  which  he  voluntarily  engaged.91 

Under  this  exception  the  insurer  is  not  liable  where  the  insured 
is  murdered.92  The  insurer  is  not  liable  where  the  insured  is  killed 
for  the  purpose  of  getting  the  insurance  money,  under  a  policy  which 
provides  that  "this  insurance  does  not  cover  *  *  *  death  re- 
sulting wholly  or  partly,  directly  or  indirectly,  from  *  *  *  in- 
tentional injuries  inflicted  by  the  insured  or  any  other  person,"  and 
which  further  provides  that  this  clause  does  not  exclude  claims  for 
personal  injuries  received  by  the  insured  while  defending  herself  or 
family,  or  her  property,  from  assaults  of  burglars,  robbers,  thieves  or 
pickpockets.93  So,  there  is  no  liability  where  the  injuries  are  inflicted 
upon  an  officer  by  a  person  who  is  resisting  arrest,  although  such 
injuries  are  within  the  meaning  of  the  words,  "external,  violent  and 
accidental  means."94  In  such  cases  the  general  liability  is  limited  by 
the  express  provision. 

§  401.  Injuries  received  while  engaged  in  violation  of  law. — Ac- 
cident insurance  companies  commonly  limit  their  liability  by  a  pro- 
vision to  the  effect  that  no  claim  shall  be  made  when  an  injury  or 
death  occurs  while  the  insured  is  engaged  in,  or  in  consequence  of,  any 
unlawful  act.  Under  this  provision  the  mere  fact  that  the  insured 

face  of  the  policy,  yet  certain  con-  Ass'n   v.   Langholz,   86   Fed.   60,   29 

ditions    or    provisos    protected    the  C.  C.  A.  628  (1898) ;  Butero  v.  Trav- 

company    against    loss,    where    the  elers'  Ace.  Ins.  Co.,  96  Wis.  536,  71 

death  or  injury  was  caused  by  in-  N.  W.  811  (1897);  Johnson  v.  Trav- 

tentional    injuries    inflicted   by   the  elers'  Ins.  Co.,  15  Tex.  Civ.  App.  314, 

insured  or  any  other  person:    Amer-  39   S.  W.  972    (1897);    Railway  Of- 

ican  Ace.  Co.  v.   Carson    (Ky.),   30  ficials',  etc.,  Ass'n  v.  McCabe,  61  111. 

S.  W.  879  (1895).  App.  565   (1895);   Phelan  v.  Travel- 

°°Ripley     v.     Insurance     Co.,     16  ers' Ins.  Co.,  38  Mo.  App.  640  (1890); 

Wall.   (U.  S.)  336  (1872).  Travelers'  Ins.  Co.  v.  McConkey,  127 

91  Lovelace     v.     Travelers'     Prot.  U.  S.  661  (1888). 

Ass'n,  126  Mo.  104,  28  S.  W.  877,  30  °3  Ging  v.  Travelers'   Ins.  Co.,  74 

L.  R.  A.  209,  Woodruff  Ins.  Cas.  270  Minn.  505,  77  N.  W.  291   (1898). 

(Ig94)  "American  Ace.  Co.  v.  Carson,  99 

92  Brown  v.  United  States,  etc.,  Co.,  Ky.  441,  36  S.  W.  169,  34  L.  R.  A. 
88  Fed.  38   (1898);   Travelers'  Prot.  301   (1895). 


§    401  LIFE,   ACCIDENT   AND   INDEMNITY    INSURANCE.  444 

is  violating  some  criminal  statute  does  not  absolve  the  company 
from  liability  unless  it  appears  that  the  death  was  in  some  manner 
caused  by  such  violation  of  law.  As  said  in  a  case  in  Indiana,93  "the 
known  violation  of  a  positive  law  *  *  *  avoids  the  policy  if  the 
natural  and  reasonable  consequences  of  the  violation  are  to  increase 
the  risk.  A  violation  of  law  does  not  avoid  the  policy  if  the  natural 
and  reasonable  consequences  of  the  act  do  not  increase  the  risk." 

The  insurance  company  must,  therefore,  show  that  the  act  was  such 
as  tended  to  produce  the  injury.  Thus,  where  the  insured  came  to 
his  death  while  engaged  in  seining  in  a  river,  in  violation  of  a  statute, 
the  court,  after  stating  the  general  principle,  said  :96  "If  the  insured 
had  been  accidentally  shot  or  struck  by  lightning  while  fishing  in 
violation  of  law,  it  could  not  be  successfully  maintained  that  there  was 
a  forfeiture."  Applying  the  rule  that  it  must  be  made  to  appear  that 
the  injury  was  the  natural  result  of  a  violation  of  law,  it  was  held 
that  the  fact  that  the  insured  was  killed  by  being  shot  soon  after  he 
had  left  a  house  of  ill  fame,  while  carrying  a  concealed  weapon,  did 
not  prevent  a  recovery  on  the  policy.  Chief  Justice  Kinne  said:97 
"It  may  be  conceded  that  Jones  visited  a  house  of  prostitution  for  an 
unlawful  purpose;  that  he  was  carrying  concealed  weapons,  in  viola- 
tion of  law,  but  it  does  not  appear  that  the  injuries  he  received  were 
caused  by  any  of  these  illegal  acts.  It  is  not  enough  to  defeat  liability 
to  show  that  the  insured  violated  the  conditions  of  the  policy  in  these 
respects,  but  it  must  also  be  shown  that  such  violation  had  a  causative 
connection  with  the  injury.  The  shooting  was  not,  in  a  legal  sense, 
caused  by,  or  the  result  of,  the  assured's  visit  to  the  bawdyhouse, 
reprehensible  as  that  act  may  have  been,  nor  by  his  carrying  concealed 
weapons  in  violation  of  law.  In  other  words,  it  does  not  appear  that 
there  was  any  such  connection  between  the  unlawful  acts  and  the 
injury  as  would  justify  the  contention  that  the  former  caused  the 
latter.  If  the  injury  was  caused  or  produced  by  something  else  than 
the  assured's  violation  of  the  law,  then  the  latter  can  not  be  said  to 
have  such  a  legal  relation  to  the  former  as  to  be  a  defense  to  an  action 
upon  the  policy.  If  the  acts  were  in  themselves  unlawful,  as  they 
were,  and  the  shooting  might  reasonably  have  been  expected  to  have  re- 

95  National  Ben.  Ass'n  v.  Bowman,        »*  Conboy  v.   Railway,   etc.,  Ass'n 
110  Ind.  355,  11  N.  E.  316    (1887);      (Ind.  App.),  43  N.  E.  1017  (1896). 
Supreme  Lodge  v.  Beck,  181  U.  S.  48        "  Jones    v.     United     States,    etc., 
(1900).     See  §  373,  supra.  Ass'n,   92   Iowa  652,   61   N.   W.   485 

(1874). 


445  ACCIDENT   INSURANCE.  §    401 

suited  from  them,  then  a  causative  connection  between  the  unlawful 
acts  and  the  injury  may  be  said  to  have  been  established."98 

Where  the  insured  was  shot  by  an  officer  who  was  attempting  to 
arrest  him  as  a  deserter,  the  death  did  not  result  from  the  unlawful 
act  of  the  insured,  as  the  insured  was  not  acting  unlawfully  at  the 
time  of  the  killing."  So,  where  the  insured  was  injured  while  at  the 
house  of  a  friend,  a  few  hours  after  he  had  been  hunting  on  Sunday, 
in  violation  of  law,  it  was  held  that  he  could  recover  on  the  policy.100 
But  where  the  accident  happened  while  the  insured  was  returning  from 
a  hunting  expedition,  and  a  statute  made  both  hunting  and  traveling 
on  Sunday  a  crime,  the  insured  was  not  allowed  to  recover.  The 
court  said:101  "The  effect  of  a  violation  of  the  Sunday  law  upon  a 
person's  right  to  recover  for  injuries  received  in  the  course  of  such 
violation  has  generally -arisen  in  cases  in  which  the  defendant  sought 
to  escape  responsibility  for  his  own  tort  to  a  traveler  or  laborer. 
On  this  question  the  decisions  have  not  been  uniform.  Some  courts 
have  held  that  the  immediate  cause  of  the  injury  was  the  travel  or 
labor  on  Sunday  and  that  the" plaintiff  could  not  recover.  Other  able 
courts  have  held  that  a  Sunday  traveler  or  laborer,  injured  by  the 
wrongful  act  or  neglect  of  another,  might  recover  upon  the  ground 
that  the  violation  of  the  Sunday  law  by  the  injured  party  is  in  the  na- 
ture of  a  condition  rather  than  the  immediate  cause  of  the  injury. 
*  *  *  The  provision  quoted  from  the  policy  excluded  liability 
from  any  injury  of  which  a  violation  of  law  was  the  cause  or  con- 
dition producing  it.  It  also  expressly  provides  exemption  from  lia- 
bility where  the  violation  of  law  is  either  the  proximate  or  remote 
cause  or  condition  producing  the  injury.  In  short,  it  is  so  drawn  as 
to  exempt  from  liability  under  the  reasoning  and  holding  of  the 
courts  in  both  classes  of  cases  cited.  Plaintiff  contends  in  argument 
that  he  was  not  engaged  in  hunting  at  the  time  he  received  the  injury, 

88  See,  also,  Bradley  v.  Mutual,  etc.,  Mich.  545,  32  N.  W.  812,  8  Am.  St. 

Ins.  Co.,  45  N.  Y.  422  (1871);  Mur-  913     (1887).     See,    also,    Griffin    v. 

ray  v.  New  York,  etc.,  Ins.  Co.,  96  Western,    etc.,    Ass'n,    20    Neb.    620 

N.  Y.  614  (1884);  Griffin  v.  Western,  (1890);    Goetzman    v.    Connecticut, 

etc.,  Ass'n,   20  Neb.   620,   31   N.   W.  etc.?    Ins.   Co.,    3    Hun    (N.   Y.)    515 

122    (1887);    Accident    Ins.    Co.    v.  (1875). 

Bennett,  90  Tenn.  256,  16  S.  W.  723  10°  Prader  v.  National,  etc.,  Ass'n, 

(1891)     [where     the     insured     was  95  Iowa  149,  63  N.  W.  601   (1895). 

killed  while  living  with  a  mistress  m  Duran  v.  Standard,  etc.,  Ins.  Co., 

in  violation  of  law].  63  Vt.  437,  22  Atl.  530,  25  Am.  St 

90  Utter  v.  Travelers'   Ins.  Co.,   65  773,  13  L.  R.  A.  637  (1891). 


§    402  LIFE,   ACCIDENT    AND    INDEMNITY    INSURANCE.  446 

but  was  walking  home  after  he  had  been  visiting.  Were  his  claim 
conceded,  we  do  not  see  how  it  gives  the  plaintiff  any  better  ground 
for  recovery.  *  *  *  The  plaintiff  was  clearly  violating  the  pro- 
visions of  the  statute  prohibiting  traveling  on  Sunday.  Every  step 
he  took  in  making  that  trip  was  in  and  of  itself  a  .violation  of  law. 
'In  taking  one  of  those  steps  he  slipped  and  was  injured.  *  *  * 
The  liability  to  accident  must  be  greatly  increased  in  the  case  of  a 
person  who,  like  the  plaintiff,  engages  in  hunting  or  traveling  about 
the  country  on  Sunday  in  open  violation  of  law,  as  compared  with  one 
who  observes  the  law.  The  defendant  had  the  right  to  show  that  it 
should  not  assume  such  increased  risk." 

A  person  who  was  shot  by  one  upon  whom  he  had  made  a  violent 
assault  died  in  consequence  of  a  violation  of  law.102  So,  a  woman 
who  voluntarily  submits  to  an  operation  for  abortion  is  engaged  in  a 
violation  of  law,  and  there  can  be  no  recovery  upon  a  policy  for 
death  resulting  therefrom.103 

There  is  some  difference  of  opinion  as  to  whether  the  law  which 
is  being  violated  must  be  a  criminal  statute.  It  was  held  in  Massa- 
chusetts that  to  invalidate  the  policy  there  must  be  a  violation  of 
some  criminal  statute.10*  A  contrary  view  was  expressed  in  New 
York  ;105  and  in  Indiana  the  court  said  :106  "In  our  opinion,  the  law 
is  this :  A  known  violation  of  a  positive  law,  whether  the  law  is  a  civil 
or  a  criminal  one,  avoids  the  policy  if  the  natural  and  reasonable 
consequences  of  the  violation  are  to  increase  the  risk;  a  violation  of 
law,  whether  the  law  is  a  civil  or  a  criminal  one,  does  not  avoid  the 
policy  if  the  natural  and  reasonable  consequences  of  the  act  do  not 
increase  the  risk." 

§  402.  Injuries  received  while  intoxicated. — Where  the  contract 
provides  that  there  shall  be  no  recovery  for  injuries  which  are  received 
while  the  insured  is  intoxicated,  the  insurance  company  is  not  liable, 
although  the  intoxication  did  not  contribute  to  the  injury.107 

102  Murray  v.  New  York  L.  Ins.  Co.,     Allen  (Mass.)  308  (1866).     See,  also, 
96  N.  Y.  614,  Woodruff  Ins.  Gas.  301     Harper  v.  Phoenix  Ins.  Co.,  19  Mo. 
(1884);    Bloom  v.  Franklin  L.  Ins.     506   (1854). 

Co.,  97  Ind.  478  (1884).  10B  Bradley  v.  Mutual,  etc.,  Ins.  Co., 

103  Hatch  v.  Mutual  L.  Ins.  Co.,  120     3  Lans.    (N.  Y.)    341,  45  N.  Y.  422 
Mass.   550,    21   Am.    R.    541    (1876).     (1870). 

As  to  suicide  being  a  violation  of        I0e  Bloom  v.  Franklin  L.  Ins.  Co., 
this  provision,  see  §  373,  supra.  97  Ind.  478   (1884). 

104  Cluff  v.  Mutual,  etc.,  Ins.  Co.,  13        1OT  Standard,  etc.,  Ins.  Co.  v.  Jones, 


447  ACCIDENT    IXSURAXCE  §    403 

///.     General  Provisions. 

§  403.  Amount  of  recovery — Disability. — The  contract  is  com- 
monly for  the  payment  of  a  specified  sum  for  certain  injuries,  such 
as  the  loss  of  a  hand,108  foot,109  or  eye,110  and  the  payment  of  a  certain 
sum  in  case  of  total  disability.  As  said  by  Mr.  Justice  Mitchell:111 
"The  principal  contest  is  as  to  the  construction  of  that  part  of  the 
policy,  and  particularly  the  term,  'w,holly  disabled.'  Accident  in- 
surance being  of  comparatively  recent  origin,  the  policies  do  not  seem 
to  have  acquired  any  settled  form ;  and  the  decisions  construing  them 
are  comparatively  few,  and  do  not  seem  to  have  agreed  on  any  very 
definite  meaning  to  be  given  to  the  term  'total  disability.'112  The 
cases  which  have  placed  a  construction  on  the  term  'total  disability1 
might  seem  to  be  divided  into  two  classes ;  viz.,  those  which  construe 
it  liberally  in  favor  of  the  insured,113  and  those  which  construe  it 
strictly  against  him.114  Any  apparent  conflict  in  the  decisions  may, 
however,  be  mostly  reconciled  in  view  of  the  differences  in  the  lan- 
guage of  the  policies,  and  of  the  different  occupations  under  which 
the  parties  were  insured.  As  is  well  said  in  Wolcott  v.  United  Life, 
etc.,  Assn.*15  'total  disability  must,  from  the  necessity  of  the  case,  bo 
a  relative  matter,  and  must  depend  largely  upon  the  occupation  and 
employment  in  which  the  party  insured  is  engaged.'  One  who  labors 
with  his  hands  might  be  so  disabled  by  a  severe  injury  to  one  hand 
as  not  to  be  able  to  labor  at  all  at  his  usual  occupation;  whereas  a 
merchant  or  professional  man  might,  by  the  same  injury,  be  only  dis- 

94    Ala.    434,    10    So.    530     (1892);  phreys  v.  National  Ben.  Ass'n,  139 

Shader  v.  Railway,  etc.,  Assur.  Co.,  Pa.  St.  214,  11  L.  R.  A.  564  (1891). 
66  N.  Y.  441,  23  Am.  Rep.  65,  Wood-         nl  Lobdill  v.  Laboring  Men's,  etc., 

ruff  Ins.  Gas.  297  (1876).     See  Jones  Ass'n,  69  Minn.  14,  38  L.  R.  A.  537 

v.  United  States,  etc.,  Ass'n,  92  Iowa  (1897). 
652,  61  N.  W.  485   (1894).  m  See  cases  cited  in  Bacon  Ben. 

108  See    Lord    v.    American,    etc.,  Soc.,  §  501;  Niblack  Vol.  Soc.,  §  401. 

Ass'n,  89  Wis.  19,  26  L.  R.  A.  741  See    4    Harvard    Law    Review    180 

(1894);     Hutchinson     v.     Supreme  (1890). 
Tent  Co.,  68  Hun  (N.  Y.)  355  (1893).         m  Hooper  v.  Accidental,  etc.,  Ins. 

108  Sheanon  v.  Pacific,  etc.,  Ins.  Co.,  Co.,  5  Hurl.  &  N.  545  (1860);  Young 

83  Wis.  507,  9  L.  R.  A.  685  (1892);  v.   Travelers'   Ins.   Co.,   80   Me.   244 

Stevers  v.  People's,  etc.,  Ins.  Ass'n,  (1888). 

150   Pa.    St.   132,   16   L.    R.   A.   446        114Lyon    v.    Railway,   etc.,   Assur. 

(1892).  Co.,  46  Iowa  631    (1877);    Saveland 

"°Mog6  v.  Socie"te",  etc.,  167  Mass.  v.  Fidelity  &  Gas.  Co.,  67  Wis.  174, 

298    39  L.  R.  A.  736    (1896);    Hum-  58  Am.  Rep.  863   (1886). 

"•55  Hun   (N.  Y.)  98   (1889). 


§    403  LIFE,   ACCIDENT   AND   INDEMNITY    INSURANCE.  448 

abled  from  transacting  some  kinds  of  business  pertaining  to  his  occu- 
pation. In  policies  of  this  character  the  aim  of  the  insurer  is  usually 
to  get  as  large  premiums  as  possible  by  incurring  the  least  possible 
liability;  and,  on  the  other  hand,  after  the  accident  occurs  the  usual 
aim  of  the  insured  is  to  recover  the  greatest  amount  of  indemnity 
for  the  least  possible  injury.  All  the  courts  can  do  is  to  construe 
the  contract  the  parties  have  made  for  themselves;  but  in  doing  so 
they  should  give  it  a  reasonable  construction,  so  as,  if  possible,  to  give 
effect  to  the  purpose  for  which  it  is  made.  There  are  a  few  proposi- 
tions applicable  to  the  construction  of  the  policy  under  consideration 
which,  under  the  evidence,  are  decisive  of  this  case.  The  first  is 
that  total  disability  does  not  mean  absolute  physical  inability  on  the 
part  of  the  insured  to  transact  any  kind  of  business  pertaining  to  his 
occupation.  It  is  sufficient  if  his  injuries  were  of  such  a  character 
that  common  care  and  prudence  required  him  to  desist  from  the 
transaction  of  any  such  business  so  long  as  it  was  reasonably  necessary 
to  effectuate  a  cure.  This  was  a  duty  which  he  owed  to  the  insurer 
as  well  as  to  himself.116  The  second  is  that,  under  the  particular 
terms  of  this  policy,  to  wit,  'from  the  transaction  of  any  and  every 
kind  of  business  pertaining  to  the  occupation  above  stated  (mer- 
chant)/ inability  to  perform  some  kinds  of  business  pertaining  to  the 
occupation  would  not  constitute  total  disability  within  the  meaning 
of  the  policy.  *  *  *  But  the  mere  fact  that  he  might  be  able, 
with  due  regard  to  his  health,  to  occasionally  perform  some  single 
and  trivial  act  connected  with  some  kind  of  business  pertaining  to  his 
occupation  as  a  merchant  would  not  render  his  disability  partial 
instead  of  total,  provided  he  was  unable  substantially  or  to  some 
material  extent  to  transact  any  kind  of  business  pertaining  to  such 
occupation.  To  illustrate  this  proposition  by  reference  to  the  evi- 
dence in  this  case,  it  appears,  as  we  shall  assume,  that  on  one  or  two 
occasions  where  the  plaintiff  went  into  his  store,  when  down  town  for 
other  purposes,  he  handed  out  some  small  article  to  a  customer,  and 
took  the  change  for  it.  This  would  not  necessarily  prove  that  he 
was  able  to  attend  to  the  business  of  waiting  on  customers,  and  that 
he  was  not  'wholly  disabled'  within  the  meaning  of  the  policy.  He 
might  be  able  on  temporary  visits  to  the  store  to  occasionally  per- 
form a  trifling  act  of  this  nature  and  yet  be  substantially  and  essen- 
tially unable  to  transact  any  kind  of  business  pertaining  to  his  occupa- 

116  Young  v.  Travelers'  Ins.  Co.,  80   Me.  244  (1888). 


449  ACCIDENT   INSURANCE.  §    404 

tion  of  merchant.  The  frequency  and  nature  of  these  acts  would 
be  for  the  consideration  of  the  jury  in  determining  whether  he  was 
totally  disabled,  but  would  ordinarily  be  by  no  means  conclusive  on 
that  question." 

The  fact  that  a  man  whose  business  was  that  of  making  loans  on 
personal  security  goes  to  his  office  for  a  short  time  every  day,  without 
doing  any  work  or  business  there,  does  not  show  that  he  was  not  totally 
disabled  from  prosecuting  any  and  every  kind  of  business  pertaining 
to  his  occupation.117 

§  404.    Construction — Effect  of  existing  judicial  decisions. — In  an 

action  on  a  policy  containing  a  provision  which  had,  prior  to  its  issu- 
ance, been  given  a  uniform  judicial  construction  by  the  courts  of  last 
resort  of  several  states,  it  will  be  presumed  that  such  construction 
was  adopted  by  the  parties  and  the  policy  issued  with  that  under- 
standing. A  policy  contained  a  provision  that  the  insurance  should 
cover  "injuries,  fatal  or  otherwise,  resulting  from  poison  or  anything 
accidentally  or  otherwise  taken,  administered,  absorbed  or  inhaled." 
Prior  to  its  issuance  another  policy  issued  by  the  same  company  had 
been  construed  so  as  not  to  exempt  the  company  from  liability  for 
the  death  or  injury  of  the  insured  resulting  from  the  unconscious 
and  involuntary  inhaling  of  illuminating  gas  while  asleep.  It  was 
held  by  the  circuit  court  of  appeals  that  the  same  construction  would 
be  adopted  in  an  action  on  the  latter  policy.  The  court  said:118 
"The  defendant  company  issued  the  policy  in  suit,  and  doubtless 
many  others  of  like  character,  after  it  was  advised  by  the  decisions 
to  which  reference  has  been  made,  one  of  which  was  a  construction  of 
its  own  contract,  that,  as  interpreted  by  the  courts  of  last  resort  in 
•several  states,  the  policy  as  drawn  would  not  exempt  it  from  liability 
if  poisonous  gas  was  unconsciously,  involuntarily  and  accidentally  in- 
haled by  the  insured,  which  occasioned  his  death  or  injury.  It  had 
knowledge,  therefore,  that  by  reason  of  such  adjudication  its  policies, 
if  it  continued  to  issue  them  in  the  old  form,  would  in  all  probability 
be  accepted  by  some,  and  possibly  many  persons,  upon  the  under- 
standing that  the  company  intended,  and  in  fact  assumed,  the  species 
of  risk  last  described.  If  such  was  not  its  intention,  its  plain  duty 

117  Turner  v.  Fidelity  &  Gas.  Co.,        "8  Fidelity,  etc.,  Co.  v.  Lowenstein, 
112    Mich.    425,    38    L.    R.    A.    529     97  Fed.  17,  38  C.  C.  A.  29  (1899),  and 
(1897),   annotated.     See   also,   Hoff-     cases  there  cited, 
man  v.  Michigan,  etc.,  Ass'n  (Mich.), 
54  L.  R.  A.  746  (1901). 
29 — ELLIOTT  INS. 


§    404  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  450 

was  to  so  modify  the  language  of  its  policy  as  to  make  its  purpose 
clear,  inasmuch  as  a  slight  change  in  the  phraseology  originally  em- 
ployed would  leave  no  room  for  doubt  or  speculation  as  to  its  meaning. 
We  are  unwilling  to  concede  that  the  insurance  company  may  con- 
tinue to  issue  policies,  with  no  modification  of  their  terms,  after 
certain  provisions  thereof  have  been  construed  by  several  courts  of 
the  highest  character  and  ability,  and  be  heard  to  insist  in  controver- 
sies between  itself  and  the  insured  with  respect  to  such  subsequently 
issued  policies,  that  they  do  not  in  fact  cover  risks  which  they  had 
been  judicially  adjudged  to  cover  before  they  had  been  issued.  While 
it  may  not  be  accurate  to  say  that  under  such  circumstances  a  technical 
estoppel  arises  in  favor  of  the  insured,  yet  courts  in  such  cases  should 
rigidly  enforce  the  rule  requiring  policies  of  insurance  to  be  construed 
most  strongly  against  the  insurer,  and  they  should  not  hesitate  to  hold 
that  decisions  construing  a  policy  adversely  to  the  contention  of  the 
insurer  thereafter  create  a  doubt  as  to  the  proper  interpretation  of 
sufficient  gravity  to  be  resolved  in  favor  of  the  insured." 


CHAPTER  XVI. 
EMPLOYEES'  LIABILITY,  GUARANTY  AND  TITLE  INSURANCE. 

/.  Employers'  Liability  Insurance.  SEC. 

SEC-  417.  Manner  of  proof. 

410.  In  general.  418.  Constructive  notice. 

411.  Injuries  while  engaged  in  desig-  419.  Supervision  of  employe. 

nated  business. 

412.  Violation  of  statute  by  insured.     ™'  C™dU  Insurance- 
A  -ID    Ti7i,      i-  v,-i-i  420.  In  general. 

413.  When  liability  accrues. 

414.  Effect  of  judgment  against  in-    42L  Construction  of  policy-Amount 

sured.  °f  recovery- 

A -ic    XT  *•        *  •    •  422-  Identity  of  the  insured. 

415.  Notice  of  injury  or  claim. 

IV.  Title  Insurance. 
II.  Fidelity  Insurance. 

416.  In  general  423'  Insurance    of    titles-Construc- 

tion. 

/.     Employers'  Liability  Insurance. 

§  410.  In  general. — The  constant  risk  from  damage  suits  to  which 
employers  of  men  engaged  in  manufacturing,  transportation  and 
other  business  are  exposed  has  led  to  the  adoption  of  a  form  of  in- 
surance which  is  commonly  known  as  employers'  liatility  insurance. 
The  insurance  company,  for  an  adequate  premium,  agrees,  subject  to 
specific  exceptions,  restrictions  and  conditions,  to  protect  the  em- 
ployer against  liability  or  loss  resulting  from  actions  brought  against 
him  by  his  employes  to  recover  damages  for  personal  injuries  caused 
by  the  negligence  of  the  employer  or  his  representatives.  The  busi- 
ness has  reached  considerable  magnitude,  and  in  some  states  there 
are  statutes  which  authorize  the  incorporation  of  companies  for  the 
express  purpose  of  writing  such  insurance. 

As  between  master  and  servant,  a  contract  exempting  the  master 
from  liability  for  the  results  of  his  negligence  is  void  as  against 
public  policy;  but  by  the  great  weight  of  authority,  a  contract  with 
a  third  person  by  which  such  third  person  agrees  to  indemnify  the 
master  is  valid.1 

1  Trenton  Pass.  R.  Co.  v.  Guaran-  246,  44  L.  R.  A.  213  (1897);  Amer- 
tors',  etc.,  Indem.  Co.,  60  N.  J.  L.  ican  Gas.  Ins.  Co.'s  Case,  82  Md.  535 

(451) 


§    411  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  452 

§411.  Injuries  while  engaged  in  designated  business. — The  em- 
ployer is  insured  against  loss  resulting  from  his  liability  for  injuries 
received  by  his  employes  while  engaged  in  a  designated  business. 
The  provision  with  reference  to  the  business  is  liberally  construed 
for  the  purpose  of  securing  to  the  insured  the  protection  for  which 
he  has  paid.  Where  a  policy  insured  an  ice  company  against  claims 
for  damages  on  the  part  of  its  employes  "in  all  operations  connected 
with  the  business  of  ice  dealers/'  it  was  held  that,  taking  into  consid- 
eration the  statements  contained  in  the  application,  this  language  cov- 
ered only  employes  in  the  operating  department,  and  that  a  person 
injured  while  engaged  in  constructing  an  ice  house  was  not  one  of 
such  employes.2 

A  policy  was  issued  under  which  the  liability  was  restricted  to 
injuries  to  employes  while  engaged  in  occupations  connected  with  the 
business  of  iron  and  steel  works;  that  is,  in  the  operating  depart- 
ment as  distinguished  from  a  business  like  that  of  constructing  nec- 
essary buildings.  An  employe  was  injured  while  at  work  in  the 
operating  department  by  the  fall  of  a  girder  which  was  being  raised 
to  its  position  by  an  independent  crew  engaged  in  this  work.  The 
court  said:3  "The  general  language  of  the  contract,  'all  operations 

(Boston,  etc.,  R.  Co.  v.  Mercantile  etc.,  Assur.  Corp.,  161  Mass.  122,  36 
Trust,  etc.,  Co.,  38  L.  R.  A.  97,  34  N.  E.  754  (1894). 
Atl.  778)  (1896);  Kansas  City,  etc.,  3  Hoven  v.  Employers',  etc.,  Assur. 
R.  Co.  v.  Southern  Ry.  News  Co.,  Corp.,  93  Wis.  201,  67  N.  W.  46,  32 
151  Mo.  373,  52  S.  W.  205,  45  L.  R.  L.  R.  A.  388  (1896).  In  reference  to 
A.  380,  74  Am.  St.  545  (1899).  As  People's  Ice  Co.  v.  Employers',  etc., 
to  the  right  of  the  injured  employe  Assur.  Corp.,  161  Mass.  122,  36  N.  E. 
to  maintain  an  action  upon  the  pol-  754  (1894),  the  court  said:  "We 
icy  of  insurance,  see  Embler  v.  Hart-  are  not  prepared  to  say  but  that 
ford,  etc.,  Ins.  Co.,  158  N.  Y.  431,  53  there  was  reasonable  ground  to 
N.  E.  212,  44  L.  R.  A.  512  (1899).  hold  that  the  policy,  taken  in  con- 
That  such  policies  sometimes  pro-  nection  with  the  application,  and 
vide  for  the  apportionment  of  the  the  language  of  the  schedule,  'all 
loss  between  the  insured  and  the  operations  connected  with  the  busi- 
insurer, — see  Rumford  Falls  Paper  ness  of  ice  dealers,'  covered  only 
Co.  v.  Fidelity,  etc.,  Co.,  92  Me.  574,  persons  engaged  in  the  actual  oper- 
43  Atl.  503  (1899).  That  this  is  ations  of  cutting,  handling,  storing 
also  true  of  credit  insurance  con-  and  delivering  ice,  and  not  those  en- 
tracts, — see  Jaeckel  v.  American,  gaged  in  the  construction  of  store- 
etc.,  Indem.  Co.,  34  App.  Div.  (N.  Y.)  houses;  nevertheless,  we  should  hes- 
565  (1898).  itate  to  adopt  such  construction  if 
2  People's  Ice  Co.  v.  Employers',  the  precise  question  were  before 

us." 


453  EMPLOYERS'  LIABILITY  INSURANCE.  ;<    in 

connected  with  the  business  of  iron  and  steel  works/  is  not  restricted 
by  anything  in  the  conditions  indorsed  on  the  policy  or  any  paper 
referred  to  or  made  a  part  of  it.  If  the  intention  was  to  restrict  such 
language  to  operations  in  any  particular  department,  or  to  any  par- 
ticular branch  of  the  business,  or  to  any  particular  instrumentalities 
used  in  such  business,  it  was  easy  to  have  said  so  in  unmistakable 
language.  The  court  should  give  the  general  language  the  assurer 
saw  fit  to  use,  under  the  circumstances,  a  broad  and  liberal  construc- 
tion in  favor  of  the  objects  for  which  the  policy  was  taken  out;  and 
by  so  doing  the  conclusion  is  easily  reached  that  it  covers  the  opera- 
tion of  constructing  a  building  for  the  use  of  the  assured  in  its 
business  as  one  of  the  operations  connected  with  such  business.'' 

But  a  policy  indemnifying  for  damages  on  account  of  injuries  to 
persons  not  employes,  resulting  from  "accident  to  or  caused  by  horses, 
cars,  plant,  ways,  works,  machinery  or  appliances  used  in  the  business 
of  the  insured  and  described  in  the  application,"  does  not  cover  in- 
juries caused  by  the  use  of  omnibus  sleighs,  as  the  risk  .would  be  dif- 
ferent. "The  defendants  would  not  have  been  liable  under  the  terms 
of  the  policy  if  the  motive  power  had  been  changed  by  the  use  of 
steam  or  electricity  instead  of  horses;  and  we  are  not  able  to  see 
that  the  result  is  different  when  one  kind  of  a  vehicle  is  substituted 
for  another.  *  *  *  Whether  the  risk  would  be  increased  or 
diminished  would  depend  upon  the  circumstances  of  the  particular 
case,  but  it  is.  evident  that  the  risk  in  the  use  of  sleighs  differs  from 
that  in  the  use  of  cars."4 

A  policy  was  issued  upon  an  application  which  stated:  "It  is  un- 
derstood that  in  the  conduct  and  operation  of  their  business,  the 
insured  employ  a  railroad  owned  by  themselves  and  used  only  for 
their  own  lumbering  purposes."  The  insurance  was  against  liability 
to  persons  who  should  "sustain  bodily  injuries  under  circumstances 
which  would  impose  on  the  insured  a  common-law  or  statutory  liabil- 
ity therefor."  The  company's  lumbering  operations  were  carried  on 
upon  lands  owned  by  it,  and  it  had  mills  and  dwellings  for  its  work- 
men in  a  region  not  otherwise  inhabited.  It  also  had,  in  connection 
with  the  mills  and  dwellings  for  the  workmen  mentioned,  a  store,  in 
which  it  kept  for  sale  to  its  agents  and  other  workmen  such  materials 
and  goods  as  they  required.  These  buildings  and  mills  were  remote 
from  any  other  settlement  and  could  not  be  reached  by  any  public 

4  Phillipsburg    Horse    Car    Co.    v.  Fidelity,  etc.,  Co.,  160  Pa.  St.  350, 
28  Atl.  823   (1894). 


§    412  LIFE,    ACCIDENT   AND   INDEMNITY    INSURANCE.  454 

road  or  highway.  The  company  constructed  and  operated  on  its  own 
land,  and  primarily  for  use  in  its  business,  a  railway  by  which  logs 
were  transported  to  the  mills  and  manufactured  into  lumber,  and 
from  the  mills  to  an  ordinary  road  some  miles  distant.  Necessary 
supplies  for  the  store  were  transported  over  the  railroad  as  occasion 
required,  and  the  company's  agents  and  workmen,  and  persons  hav- 
ing business  at  the  mill  or  at  the  shop,  such  as  commercial  travelers, 
were  carried  from  time  to  time  over  the  railway.  From  some  of 
such  persons  the  company  demanded  and  collected  pay  for  transporta- 
tion. Two  commercial  travelers,  who  had  been  to  the  store  to  take 
orders,  were,  by  special  arrangement  and  for  compensation,  being 
carried  over  the  road  on  a  locomotive,  which  was  overturned,  and  the 
passengers  received  injuries  for  which  they  recovered  damages  from 
the  railroad  company.  It  was  held  that  under  all  the  circumstances 
the  injuries  occurred  within  the  scope  of  the  company's  lumbering 
operations,  and  that  the  insurance  company  was  therefore  liable.5 

§  412.  Violation  of  statute  by  insured. — It  is  sometimes  provided 
that  there  shall  be  no  liability  for  injuries  to  employes  caused  by  the 
neglect  of  the  insured  to  obey  statutes  and  ordinances  designed  for 
the  protection  of  such  employes.  Where  the  policy  insured  against 
liability  for  injuries  accidentally  sustained  by  employes,  except  a 
child  illegally  employed,  it  was  held  that  the  company  was  not  liable 
for  damages  which  were  recovered  from  the  insured  for  injuries 
sustained  through  its  negligence  by  a  child  under  twelve  years  of 
age,  employed  in  violation  of  law.  The  insured  'claimed  that  under 
this  contract  the  insurance  company  was  exempted  from  liability  only 
where  the  injuries  were  proximately  caused  by  the  illegality  of  the 
employment,  but  the  court  said:6  "We  can  entertain  no  doubt  but 
that  the  meaning  of  the  clause  in  question  which  was  intended  by 
the  parties,  and  which  should  be  given  it  by  the  courts,  is  the  popular 
meaning  as  distinguished  from  the  purely  technical,  legal  meaning. 
So  construed,  all  difficulties  disappear,  and  the  clause  becomes  a  sub- 
stantial limitation,  as  undoubtedly  intended  by  the  parties,  and  it 
encourages  no  violation  of  law,  but  rather  discourages  it." 

In  a  recent  New  York  case,  the  application  upon  which  the  policy 
was  issued  contained  an  agreement  on  the  part  of  the  insured,  a  ce- 

5  Travelers'  Ins.  Co.  v.  Wild  River  6  Goodwillie  v.  London  Guaran- 
Lumber  Co.,  83  Fed.  977,  28  C.  C.  A.  tee,  etc.,  Co.,  108  Wis.  207,  84  N.  W. 
127  (1897).  164  (1900). 


455  EMPLOYERS'  LIABILITY  INSURANT  i:.  §  413 

merit  company,  to  "conduct  all  business  and  maintain  all  premises 
to  which  such  proposed  insurance  may  apply  in  strict  compliance 
with  all  statutes  and  ordinances  provided  for  the  safety  of  persons." 
One  of  the  employes  of  the  insured  was  injured  while  attempting  to 
oil  a  shafting  in  certain  machinery,  and  subsequently  brought  an 
action  against  the  cement  company  and  secured  judgment,  which  the 
cement  company  paid  and  demanded  from  the  insurance  company. 
The  insurance  company  claimed  that  the  insured  had  forfeited  its 
right  to  indemnity  because  it  had  failed  to  maintain  its  premises  in 
compliance  with  the  factory  act,  which  required  such  machinery  to  be 
properly  guarded.  "There  are  but  few  cases,"  said  Mr.  Justice 
Haight,7  "to  be  found  in  our  courts  in  which  the  provisions  of  the 
factory  act  have  been  construed,  and  these  offer  but  little  aid  in 
construing  the  provisions  here  involved.  The  manifest  purpose  of  the 
enactment  was  doubtless  to  give  more  force  to  the  existing  rule  that 
masters  should  afford  a  reasonably  safe  place  in  which  their  servants 
are  called  upon  to  work.  We  think,  however,  that  the  legislature 
could  not  have  intended  that  every  piece  of  machinery  in  a  large 
building  should  be  covered  or  guarded.  This  would  be  impracticable. 
What  evidently  was  intended  was  that  those  parts  of  the  machinery 
which  were  dangerous  to  servants  whose  duty  required  them  to  work 
in  its  immediate  vicinity  should  be  properly  guarded  so  as  to  mini- 
mize, as  far  as  practicable,  the  dangers  attending  their  labors. 
Human  foresight  is  limited,  and  masters  are  not  call  3d  upon  to  guard 
against  every  possible  danger.  They  are  required  only  to  guard 
against  such  dangers  as  would  occur  to  a  reasonably  prudent  man 
as  liable  to  happen."  It  appearing  that  this  had  been  done,  the 
company  was  allowed  to  recover  upon  the  policy  of  insurance. 

§  413.  When  liability  accrues. — Whether  the  insured  can  main- 
tain an  action  against  the  insurer  without  having  paid  the  claim  of 
an  employe  depends,  of  course,  upon  the  language  of  the  policy.  If 
the  insurance  is  against  damages  actually  suffered,  it  is  necessary  for 
the  insured  to  pay  the  judgment  or  claim  against  it  before  proceed- 
ing against  the  insurance  company.  But  where  the  policy  by  its 
terms  protects  the  insured  against  liability  for  damages  for  injuries 
suffered  by  his  employes,  it  is  not  necessary  that  the  liability  be  dis- 
charged before  bringing  an  action.8  "According  to  the  terms  of  the 

7  Glens  Falls,  etc.,  Co.  v.  Travel-  8  Hoven  v.  Employers',  etc.,  Assur. 
ers'  Ins.  Co.,  162  N.  Y.  399,  56  N.  E.  Corp.,  93  Wis.  201,  67  N.  W.  46,  32 
897  (1900).  L.  R-  A.  388  (1896). 


§    413  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  456 

policy,"  said  Mr.  Justice  Martin,9  "the  insurance  company  under- 
took to  pay  all  such  sums  as  the  railway  company  should  become 
liable  for  in  damages  in  consequence  of  bodily  injuries  caused  by  the 
operation  of  its  street  railway.  Upon  the  occurrence  of  an  accident 
in  respect  to  which  a  claim  for  damages  may  have  arisen,  notice  was 
required  to  be  immediately  given  by  the  railway  company  to  the 
insurance  company.  *  *  *  The  insurance  company  assumed  the 
liability  for  such  claim  and  had  authority  to  settle  it  without  litiga- 
tion. If  any  legal  proceedings  were  instituted  against  the  railroad 
company  to  enforce  it,  the  insurance  company  bound  itself  to  take  ab- 
solute control  of  the  same  in  the  name  and  in  behalf  of  the  assured. 
In  only  one  way  could  it  have  absolved  itself  from  this  obligation,  and 
that  was  by  paying  or  offering  to  pay  the  insured  the  full  amount 
for  which  it  was  liable  in  such  cases  by  its  policy.  According  to 
these  terms,  the  ascertainment  and  adjustment  of  the  liability  of  the 
insured  for  claims  for  damages  depended  upon  the  insurance  com- 
pany, provided  it  acted  in  good  faith.  The  assured  surrendered  the 
entire  control  and  management  thereof  to  the  insurer.  So  long  as 
the  latter  resisted  in  the  courts  the  enforcement  of  such  claims,  no 
right  of  action  accrued  upon  the  policy;  for,  until  the  termination  of 
the  litigation,  both  parties  denied  the  liability  of  the  assured,  and 
the  existence  and  extent  thereof  remained  undetermined,  according 
to  the  methods  by  which  the  parties,  in  effect,  agreed  it  should  be 
ascertained  and  fixed.  Any  other  interpretation  of  the  policy  would 
take  from  the  insurer  the  protection  for  which  it  contracted/'  But 
the  liability  of  the  insured  is  not  determined  so  as  to  render  it  liable 
to  pay  such  damages  so  long  as  an  action  is  pending  in  court  against 
the  insured,  or  an  appeal  from  a  judgment  therefor  is  pending  in  the 
supreme  court. 

An  employers'  liability  policy  provided  (1)  that  it  insured  against 
all  liability  on  account  of  fatal  or  non-fatal  injuries  suffered  by  an 
employe;  (2)  that  the  company,  at  its  own  expense,  would  take  upon 
it  the  settlement  of  any  loss,  and  the  control  of  any  legal  proceedings 
taken  against  the  insured  to  enforce  a  claim  for  injuries  to  an  in- 
sured employe;  (3)  that  the  insured  should  not  settle  for  any  injury 
without  the  consent  of  the  insurance  company;  (4)  that  no  action 
should  lie  against  the  insurance  company  after  the  period  in  which 

"Fidelity,  etc.,  Co.  v.  Fordyce,  64     dyce,   62  Ark.   562,  54  Am.   St.  305 
Ark.  174,  41  S.  W.  420  (1897).     See     (1896). 
also,  American,  etc.,  Ins.  Co.  v.  For- 


457  EMPLOYERS'  LIABILITY  ixsn; \ NCI-:.  <    ill 

action  might  be  brought  by  the  employe  against  the  insured,  unless 
at  such  period  there  was  a  suit  pending  for  such  purpose,  in  which 
case  the  action  might  be  brought  in  respect  to  a  claim  involved  in 
such  suit  against  the  company  within  thirty  days  after  a  judgment 
was  rendered  in  such  suit,  and  not  later.  It  was  held  that  this  policy 
was  not  one  merely  of  indemnity  against  any  act  of  an  employe,  but 
that  in  case  of  accident  to  him  whereby  he  had  a  cause  of  action 
against  the  insured,  the  insurance  company  would  assume  and  pay 
the  liability.  Also,  that  an  employe  having,  while  so  employed,  sus- 
tained injury  and  recovered  a  judgment  therefor  against  the  insured, 
the  insurance  company  was  liable  therefor  in  an  action  against  it 
without  the  employer  having  first  paid  the  judgment.10 

§  414.  Effect  of  judgment  against  insured. — Ordinarily,  questions' 
determined  in  a  suit  brought  by  the  employe  against  the  employer  to 
recover  damages  for  personal  injuries  are  res  adjudicata,  in  a  pro- 
ceeding by  the  employer  against  the  insurance  company  to  recover 
upon  a  policy  covering  the  particular  risk  in  question. 

In  a  New  York  case,  an  action  was  brought  by  an  employe  against 
his  employer  to  recover  damages  for  personal  injuries  alleged  to  have 
been  caused  by  the  negligence  of  the  employer.  The  defense  was 
undertaken  by  the  insurance  company,  but  a  short  time  before  the 
time  set  for  trial  it  withdrew  from  the  defense  and  permitted  judg- 
ment to  go  by  default  on  the  theory  that  the  evidence  showed  that  the 
employer  had  neglected  to  comply  with  the  provisions  of  the  statute  for 
the  protection  of  his  employes,  and  therefore  the  insurance  company 
was  not,  under  the  terms  of  its  policy,  liable  for  the  loss.  In  an  action 
subsequently  brought  against  the  insurance  company  by  the  employer, 
it  was  claimed  that  the  question  of  negligence  of  the  employer  in 
failing  to  comply  with  the  statutory  provisions  was  res  adjudicata,  but 
the  court  said:11  "We  do  not  think  that  the  adjudication  in  that 
action  is  binding  upon  the  plaintiff  in  this  action,  for  the  reason  that, 
under  the  contract  of  insurance,  the  insurance  company  had  agreed 
to  defend  the  action,  and  had  conducted  such  defense  down  to  the 
eve  of  the  trial,  and  then  withdrew,  leaving  the  cement  company 
without  reasonable  opportunity  to  prepare  its  own  defense  to  the 
action.  Had  the  insurance  company  continued  its  defense,  it  might 

10Anoka  Lumber  Co.  v.  Fidelity,  "Glens  Falls,  etc.,  Co.  v.  Trav- 
etc.,  Co.,  63  Minn.  286,  65  N.  W.  elers'  Ins.  Co.,  162  N.  Y.  399,  56  N. 
353,  30  L.  R.  A.  689  (1895).  E.  897  (1900). 


§    415  LIFE,   ACCIDENT   AND   INDEMNITY    INSURANCE.  458 

have  shown  upon  the  trial  that  the  cement  company  was  free  from 
negligence  in  the  matter,  and  thus  have  avoided  judgment  against  the 
company;  but  having  withdrawn  from  the  defense  of  that  action  im- 
properly, and  permitted  judgment  to  go  against  the  cement  company 
by  default,  it  is  now  estopped  from  claiming  that  the  adjudication 
thus  obtained  precludes  the  plaintiff  from  the  indemnity  which  the 
defendants  had  contracted  to  render." 

§  415.  Notice  of  injury  or  claim. — A  provision  in  a  policy  of  this 
character,  to  the  effect  that  notice  shall  immediately  be  given  to  the 
company  of  the  occurrence  of  an  accident,  is  a  condition  precedent 
to  liability,  although  the  policy  contains  no  forfeiture  clause.  Where 
an  employe  made  no  claim  for  damages  until  nine  months  after  the 
accident,  a  notice  given  at  that  time  was  held  to  be  too  late.  "Cer- 
tainly we  can  not  hold,"  said  the  court,  "under  the  conditions  of  this 
policy,  that  the  notice  of  the  claim  for  damages,  made  for  the  first 
time  nine  months  after  the  accident,  satisfied  the  requirement  that 
immediate  notice  should  be  given  of  the  occurrence  of  the  accident ; 
nor  can  we  hold  that  such  requirement  was  not  a  condition  precedent ; 
nor  can  we  hold  that  such  notice  of  an  accident  given  for  the  first 
time  nine  months  after  the  occurrence  of  the  accident  was  imme- 
diate notice  within  the  condition  quoted,  as  those  words  have  been 
repeatedly  construed  in  this  court."12 

But  in  Minnesota,  under  a  policy  which  contained  a  clause  to  the 
effect  that  "the  insured,  upon  the  occurrence  of  an  accident,  and  upon 
notice  of  any  claim  on  account  of  an  accident,  shall  give  imme- 
diate notice  in  writing  of  such  accident,  or  claim,  with  the  fullest 
information  available,  to  the  company,  at  its  office  in  New  York  City, 
or  to  an  agent,  if  any,  who  shall  have  countersigned  this  policy,"  it 
was  held  that  the  insured  need  not  give  notice  to  the  insurance  com- 
pany until  notice  that  a  claim  had  been  made.13 

12  Underwood   Veneer   Co.   v.   Lpn-  Grand  Rapids,  etc.,  Co.  v.  Fidelity, 

don   Guar.,   etc.,   Co.,   100   Wis.   378,  etc.,     Co.,     Ill     Mich.     148,     69     N. 

75  N.  W.  996  (1898);  quoting  Kentz  W.  249   (1896). 

ler  v.  American,  etc.,  Ace.  Ass'n,  88  13  Anoka  Lumber  Co.  v.  Fidelity, 

Wis.    589,    60    N.    W.    1002     (1894).  etc.,  Co.,  63  Minn.  286,  65  N.  W.  353, 

See  further,  as  to  the  construction  30  L.  R.  A.  689  (1895). 
of   the   provision    requiring   notice, 


459  FIDELITY    INSURANCE.  §    416 

//.     Fidelity  Insurance. 

§  416.  In  general. — Contracts  by  which  a  party  is  insured  against 
loss14  by  the  fraud  or  dishonesty  of  his  employes  are  contracts  of  in- 
surance and  not  of  suretyship.15  "Guaranty  insurance,"  said  Mr. 
Justice  Wilkin,1(i  "is,  in  its  practical  sense,  a  guaranty  or  insurance 
against  losses  in  case  the  person  so  guaranteed  makes  a  designated 
default  or  be  guilty  of  specified  conduct.  It  is  usually  against  mis- 
conduct or  dishonesty  of  an  employe  or  officer,  though  sometimes 
against  a  breach  of  contract.  This  branch  of  insurance  is  so  much 
more  modern  in  origin  and  development  than  fire,  marine,  life  and 
accident  insurance  that  there  are  few  decisions  upon  the  subject ;  but 
the  business  is  gradually  increasing  and  is  doubtless  destined  to  take 
an  important  place  in  the  commercial  world.  It  may  be  confidently 
stated  that,  notwithstanding  the  comparative  absence  of  specific  de- 
cisions, the  general  principles  applicable  to  other  classes  of  insur- 
ance are  applicable  here  as  well.  Thus,  the  general  doctrine  of  war- 
ranty, representation  and  concealment,  as  applied  to  fire,  life  and 
marine  insurance,  is  applicable  also  to  the  subject  of  guaranty  insur- 
ance." 

Fidelity  policies  usually  provide  that  the  insured  shall  promptly 
notify  the  company  of  any  fraud  or  dishonesty  on  the  part  of  the  em- 
ploye.17 A  condition  in  the  bond  of  fidelity  insurance,  which  requires 

14  As  to  what  are  "losses,"  see  Rice  See,   also,   People   v.    Fidelity,   etc., 

v.  National,  etc.,  Ins.  Co.,  164  Mass.  Co.,    153    111.    25    (1894);    Claflin   v. 

285,  41  N.  E.  276  (1895).  United    States,   etc.,   Co.,    165   Mass. 

"Supreme     Council     v.     Fidelity,  501,  52  Am.  St.  528  (1896).    For  the 

etc.,  Co.,  63  Fed.  48,  11  C.  C.  A.  96  general  principles  of  insurance  gov- 

(1894);     Mechanics'    Sav.    Bank    &  erning  contracts  of  this  character, 

Trust  Co.  v.  Guarantee  Co.,  68  Fed.  see  Mechanics'  Sav.  Bank  &  T.  Co. 

459     (1895).     The     principal     ques-  v.  Guarantee  Co.,  68  Fed.  459  (1895); 

tions    which    have    arisen    out    of  Supreme  Council  v.  Fidelity  &  Gas. 

credit  insurance  have  been  those  of  Co.,  63  Fed.  48,  11  C.  C.  A.  96  (1894). 

construction.     As     an     illustration,  In  the   Mechanics'   Sav.   Bank  case 

see  the  cases  of  Smith  v.  National,  the   court   said:      "The  business  is 

etc.,  Ins.  Co.,  65  Minn.  283,  68  N.  W.  therefore  becoming  one  of  vast  pub- 

28,    33    L.    R.    A.    511    (1896),    and  lie   as  well   as  private  importance, 

Shakman  v.  United  States,  etc.,  Co.,  and  it  can  not  be  objected  if  rules 

92  Wis.  366,  66  N.  W.  528,  53  Am.  of  reasonable  stringent  liability  are 

St.  920  (1896).  applied    to    these    contracts    as    in 

10  People    v.    Rose,    174    111.    310,  other  forms  of  insurance." 
Woodruff  Ins.  Gas.  16  (1898);  quot-        "Where  the  relation  of  principal 

ing   9   Am.    &   Eng.    Enc.    Law    65.  and  surety  exists,  the  surety  is  en- 


LIFE,   ACCIDENT    AND    INDEMNITY    INSURANCE.  4GO 

that  a  claim  thereunder  shall  be  made  as  soon  as  practicable  after 
the  discovery  of  the  loss,  and  within  six  months  after  the  expiration  of 
the  bond,  must  be  complied  with  or  there  can  be  no  recovery ;  and  the 
fact  that  the  insurance  company  has  actual  knowledge  of  the  loss 
does  not  excuse  compliance  with  such  a  condition.18  Where  the  con- 
tract requires  that  written  notice  of  any  act  of  the  employe  involving 
loss  to  the  employer  shall  be  given  as  soon  as  practicable  after  knowl- 
edge of  such  act,  it  is  not  necessary  to  give  notice  of  a  mere  suspicion. 
Thus,  where  a  bond  was  given  to  protect  a  bank  from  the  dishonesty 
of  its  cashier,  it  was  held  that  notice  need  be  given  only  after  the 
bank  had  knowledge  of  such  facts  as  would  justify  a  charge  of  fraud 
or  dishonesty  against  the  cashier.19 

The  notice  must  be  given  within  a  reasonable  time.  A  bond  pro- 
vided that  notice  should  be  given  the  company  of  any  act  of  the  cashier 
of  a  bank  which  might  involve  loss  for  which  the  insurance  company 
might  be  responsible,  "as  soon  as  practicable  after  the  occurrence  of 
such  acts  shall  have  come  to  the  knowledge  of  the  bank."  The  bank 
suspended  payment  and  passed  into  the  hands  of  a  receiver,  and  after- 
wards notified  the  surety  company  of  the  discovery  of  dishonest  acts 
of  the  cashier,  and  made  proofs  of  loss  as  required.  It  was  held  to  be 

titled  to  notice,  although  it  is  not  Contra,  see  Phenix  Ins.  Co.  v.  Find- 
expressly  provided  for  in  the  bond,  ley,  59  Iowa  591,  13  N.  W.  738 
In  Phillips  v.  Foxall,  L.  R.  7  Q.  B.  (1882). 

666  (1872),  it  was  said:    "We  think  "California  Sav.  Bank  v.  Ameri- 

that  in  the  case  of  a  continuing  guar-  can  Surety  Co.,  87  Fed.  118  (1898); 

anty  for  the  honesty  of  a  servant,  Michigan    Sav.,   etc.,   Ass'n   v.    Mis- 

if   the   master   discovers    that    the  souri,  etc.,  Trust  Co.,  73  Mo.  App. 

servant  has  been  guilty  of  acts  of  161     (1898);     Missouri,    etc.,    Trust 

dishonesty  in  the  course  of  the  serv-  Co.  v.  German  Nat'l  Bank,  77  Fed. 

ice  to  which  the  guaranty  relates,  1TI,  23  C.  C.  A.   65    (1896)    [where 

and    if,    instead    of   dismissing   the  a  guarantee  company,  after  it  knew 

servant,  as  he  may  do  at  once,  and  of  the  fact  that  an  employe  was  a 

without  notice,   he  chooses  to   con-  defaulter,   took   security   from   him 

tinue    in    his    employ    a    dishonest  without  notifying  the  insured  that 

servant,  without  the  knowledge  and  it  disclaimed  liability,  it  was  held 

consent  of  the  surety,  express  or  im-  proper  to   submit  to   the   jury   the 

plied,   he  can  not  afterwards  have  question    as   to   whether   the    guar- 

recourse  to  the  surety  to  make  good  antee  company  waived  the  defense 

any  loss  which  may  arise  from  the  that  the  employe  in  his  application 

dishonesty  of  the  servant  during  the  for  the   bond   had   understated   his 

subsequent  service."     To  the  same  indebtedness  to  the  bank], 

effect,    see    Lancashire    Ins.    Co.    v.  19  American   Surety  Co.  v.  Pauly, 

Callahan,     68     Minn.     277      (1897).  170  U.  S.  133  (1898). 


461  FIDELITY   INSURANCE.  §    416 

a  question  for  the  jury  as  to  whether  notice  had  been  given  with  rea- 
sonable promptness.20 

Such  contracts  are  strictly  limited  with  reference  to  the  time  and 
manner  of  employment,  and  therefore  cease  to  be  effective  where 
there  is  a  change  of  employment.  The  cashier  of  a  national  bank 
remains  in  the  "service  of  the  bank"  after  the  bank  is  in  the  hands  of 
a  bank  examiner  who  is  investigating  its  affairs,  and  until  the  ap- 
pointment and  qualification  of  a  receiver.21  In  the  same  case  in  the 
lower  court  it  was  held  that  the  cashier  was  "in  the  service  of  the 
bank"  while  he  was  in  the  employ  of  the  receiver,  who  was  winding 
up  the  affairs  of  the  bank.22  So,  where  a  bank  was  insured  against 
loss  through  the  fraud  or  dishonesty  of  an  employe  in  connection 
with  his  duties  as  teller,  "or  the  duties  to  which,  in  the  employer's 
service,  he  may  be  subsequently  appointed  or  assigned  by  the  em- 
ployer," the  contract  was  held  to  cover  his  misconduct  while  acting 
as  assistant  cashier.23 

Where  a  bond,  given  to  secure  a  bank  against  loss  by  reason  of 
fraud  or  dishonesty  of  an  employe,  provided  that  a  claim  thereunder 
should  embrace  only  acts  and  defaults  committed  during  its  currency, 
and  within  twelve  months  next  before  the  discovery  of  the  act  or  de- 
fault, it  was  held  that  it  did  not  cover  a  default  committed  more  than 
twelve  months  prior  to  the  discovery,  which  would  have  been  discov- 
ered within  the  year  had  not  such  discovery  been  prevented  by  the 
act  of  the  employe  in  falsifying  the  books  during  the  year  preceding 
the  discovery.  The  court  said:24  "The  bank's  position  rests  upon 
the  assumption  that  it  would  have  recovered  its  earlier  losses  by 
action  upon  this  bond,  but  for  the  fraudulent  postponement  of  their 
discovery.  Let  this  be  conceded,  still  it  is  obvious  that  seasonable 
discovery  of  the  preceding  dishonest  acts  would  have  rendered  the 
perpetration  of  the  succeeding  ones  impossible,  and  hence  that  the  en- 
tire liability  [of  the  surety]  is  one  which  could  not  possibly  have  ac- 
crued if  discovery  of  the  earlier  embezzlements  had  been  made  within 
the  prescribed  time;  and  it  is  not  possible  to  hold,  in  the  face  of  a 

20  American   Surety  Co.  v.   Pauly,     Nat'l  Bank,  97  Ga.  634,  54  Am.  St. 

72  Fed.  470,  18  C.  C.  A.  644   (1896).  440  (1895). 

21  American   Surety  Co.  v.   Pauly,  **  Fidelity,  etc.,  Co.  v.  Consolidated 
170  U.  S.  133  (1898).  Nat'l  Bank,  71  Fed.  116,  17  C.  C.  A. 

22  American   Surety  Co.  v.   Pauly,  641    (1895);    reversing  67   Fed.  874 

73  Fed.  470,  18  C.  C.  A.  644   (1896).     (1895). 

23  Fidelity,  etc.,  Co.  v.  Gate  City 


§    417  LIFE,    ACCIDENT    AND    INDEMNITY    INSURANCE.  462 

condition  limiting  liability  by  the  requirement  of  discovery,  that,  by 
reason  of  non-discovery,  the  liability  so  limited  was  extended  or  en- 
larged." 

§  417.  Manner  of  proof. — The  contract  often  provides  that  certain 
facts  and  statements  shall  be  taken  as  proof  of  a  default  by  the  em- 
ploye, and  the  amount  of  such  default.  Where  this  is  done  the  pro- 
duction of  such  evidence  makes  a  prima  facie  case  against  the  in- 
surer.25 

Where  a  policy  insuring  against  actual  loss  by  theft  or  dishonesty 
of  an  employe  provided  the  means  of  determining  the  extent  and 
amount  of  the  shortage,  and  that,  when  thus  ascertained,  it  should  be 
accepted  as  evidence  that  it  was  caused  by  fraud  or  dishonesty,  and 
not  by  any  of  the  various  other  causes  enumerated  as  exceptions,  it 
was  held  that  a  shortage  so  ascertained  was  prima  facie  evidence  of  its 
existence,  and  that  it  was  caused  by  the  employe's  fraud  or  dishon- 
esty, thus  casting  the  burden  upon  the  insured  to  rebut  the  prima 
facie  ease  by  sufficient  evidence.  It  was  held,  however,  that  it  was 
not  bound  to  do  this  by  affirmative  evidence  showing  a  particular  one 
of  the  causes  enumerated  as  exceptions,  but  might  do  it  by  negative 
evidence  showing  that  it  was  not  caused  by  fraud  or  dishonesty  of  the 
employe,  and  hence  must  have  been  produced  by  one  or  more  of  the 
excepted  causes.  It  was  also  held,  in  an  action  brought  by  the  in- 
surance company  against  the  employe  to  recover  money  alleged  to 
have  been  paid  to  his  employer  on  the  bond,  that,  the  contract  of 
guaranty  having  been  executed  at  defendant's  request,  the  obliga- 
tion to  indemnify  plaintiff  was  co-extensive  with  the  obligation  of 
the  latter  to  indemnify  the  employer,  and  any  provisions  in  the  con- 
tract between  the  insurer  and  the  employer  as  to  the  proofs  of  liabil- 
ity were  equally  binding  on  the  defendant  in  favor  of  the  plaintiff.26 

Under  a  bond  to  "make  good  such  pecuniary  loss,  if  any,  as  may  be 
sustained  by  an  employer  by  reason  of  fraud  or  dishonesty  of  an  em- 
ploye in  connection  with  the  duties  referred  to,  amounting  to  embez- 
zlement or  larceny,  which  was  committed  or  discovered  during  the 
continuance  of  said  term  or  any  renewal  thereof," — entries,  receipts 
and  reports  made  by  an  employe,  the  treasurer  of  a  benevolent  asso- 
ciation, during  the  life  of  the  bond  in  the  ordinary  course  of  his  duty, 

28  American   Surety  Co.   v.   Pauly,     Minn.  170,  30  L.  R.  A.  58t>,  56  Am. 
72  Fed.  484,  18  C.  C.  A.  657   (1896).     St.  464  (1895). 
28  Fidelity,  etc.,  Co.  v.  Eickhoff,  63 


463  FIDELITY   INSURANCE.  §    418 

charging  himself  with  certain  items,  are  not  conclusive  against  the 
insurance  company  as  to  the  time  such  items  were  received.27 

§  418.  Constructive  notice. — A  bank  is  not  bound  by  constructive 
notice  of  matters  brought  to  the  attention  of  its  president  and  caslii.-r 
while  they  were  .engaged  in  a  fraudulent  design  to  rob  the  bank. 
"The  presumption  that  an  agent  informed  his  principal  of  that 
which  his  duty  and  the  interests  of  the  principal  required  him  to 
communicate  does  not  arise  where  the  agent  acts  or  makes  declara- 
tions not  in  execution  of  any  duty  that  he  owes  to  the  principal,  or 
within  any  authority  possessed  by  him,  but  to  subserve  simply  his 
own  personal  ends  to  commit  some  fraud  against  the  principal.  In 
such  cases  the  principal  is  not  bound  by  the  acts  or  declarations  of  the 
agent  unless  it  is  proved  that  he  had  at  the  time  actual  notice  of  them, 
or,  having  received  notice  of  them,  failed  to  disavow  what  was  as- 
sumed to  be  said  or  done  in  his  behalf."28 

§  419.  Supervision  of  employe. — The  character  and  extent  of  the 
supervision  which  will  be  exercised  over  employes  by  the  insured  is  a 
very  important  factor  in  the  risk  assumed  by  a  fidelity  insurance 
company.  But  an  insured  owes  no  duty  of  supervision  to  the  insurer, 
unless  it  is  imposed  by  the  contract  of  insurance.29 

There  is  some  controversy  as  to  whether  a  statement  made  by  an 
applicant  for  insurance,  as  to  the  kind  of  supervision  exercised  and 
the  method  of  checking  accounts,  is  in  the  nature  of  a  promissory 
representation  and  its  future  observance  vital  to  the  contract.  In 
an  English  case'  a  guaranty  company  issued  a  policy  upon  statements 
that  the  accounts  were  checked  weekly.  It  appeared  that  this  had 

27  Supreme     Council     v.     Fidelity,  that  where  there  is  nothing  in  the 
etc.,  Co.,  63  Fed.  48,  11  C.  C.  A.  96  contract   requiring   the    insured    to 
(1894).     In  this  decision  the  various  notify  the  insurance  company  that 
authorities  on  both  sides  of  the  ques-  it  has  learned  that  the  employe  is 
tion  are  collected  and  reviewed.  untrustworthy,  the  knowledge  of  the 

28  American   Surety  Co.  v.   Pauly,  cashier  is  not  imputable  to  the  bank. 
170  U.  S.  133   (1898);   citing  Henry  The  doctrine  of  constructive  notice 
v.  Allen,  151  N.  Y.  1,  36  L.  R.  A.  658  is  held   to   have  no  application   to 
(1896).     See     2     Pomeroy     Equity  such  a  contract. 

Juris.,  §  675.  In  Fidelity,  etc.,  Co.  -'Fidelity,  etc.,  Co.  v.  Gate  City 
v.  Gate  City  Nat'l  Bank,  97  Ga.  634,  Nat'l  Bank,  97  Ga.  634,  54  Am.  St 
54  Am.  St.  440  (1895),  it  was  held  440  (1895). 


§    419  LIFE,    ACCIDENT   AND   INDEMNITY   INSURANCE.  464 

been  the  practice,  and  that  it  was  discontinued  after  the  policy  was 
issued.  It  was  held  that  there  could  be  no  recovery  on  the  policy.30 

In  a  Canadian  case  it  appeared  that  the  policy  was  issued  upon  the 
express  condition  that  the  answers  contained  in  the  application  em- 
braced a  true  statement  of  the  manner  in  which  the  business  was 
conducted,  and  accounts  kept,  and  that  they  would  be  so  kept.  As 
there  had  been  no  proper  supervision  exercised  over  the  books,  the 
insured  was  not  permitted  to  recover  for  a  loss  caused  by  the  dishon- 
esty of  an  employe.31  A  good-faith,  customary  examination  of  the 
books  of  a  bank,  such  as  a  committee  deemed  sufficient  for  the  pro- 
tection of  the  bank,  is  a  compliance  with  a  requirement  in  the  bond 
of  a  bank  teller  that  the  bank  shall  "observe  all  due  and  customary 
supervision  over  such  employe  for  the  prevention  of  default/'32 

Where  a  policy  stipulates  that  a  bank  "shall  observe  all  due  and 
customary  diligence"  in  the  supervision  of  its  employes,  it  is  not 
obliged  to  comply  with  the  general  bank  custom  as  to  the  taking  of  a 
trial  balance  from  the  individual  ledgers.33 

In  answer  to  an  inquiry,  the  employer  stated  that  the  employe 
would  be  authorized  to  draw  checks  to  which  the  countersignature  of 
the  bookkeeper  would  invariably  be  required.  It  was  held  that  there 
could  be  no  recovery  for  losses  caused  by  the  drawing  of  checks  to 
which  the  signature  of  the  bookkeeper  was  not  required.  The  court 
said:34  "A  written  statement  made  by  the  employers  to  the  obligee 

so  Towle  v.  National  Guardian  Ins.  anced  and  closed  at  the  end  of  each 

Soc.,    7    Jur.    (N.    S.)    1109    (1861),  quarter:    Board  of  Education  v.  Cit- 

reversing    same    case,    30    Law    J.  izens'  Ins.,  etc.,  Co.,  30  U.  C.  C.  P. 

Ch.  900   (1860).     But  in  Benham  v.  132    (1879).     See  also,   Hunt  v.  Fi- 

United  Guarantee,  etc.,  Co.,  7  Exch.  delity,  etc.,  Co.,  99  Fed.  242,  30  C.  C. 

742   (1852),  the  applicant  stated  in  A.    496     (1900),    quoted    at    §    103, 

answer   to   a   question   as   to   what  supra. 

checks  would  be  used  to  secure  ac-  w  Mechanics'  Sav.  Bank  &  T.  Co.  v. 

curacy  in  the  accounts  of  the  treas-  Guarantee  Co.,  68  Fed.  459  (1895). 

urer,  that  they  were  "examined  by  M  Guarantee     Co.     v.     Mechanics' 

finance  committee  every  fortnight."  Sav.    Bank,    etc.,    Co.,    80    Fed.    766 

It  was  held  that  this  was  a  mere  (1896). 

representation  of  intention  and  that  "*  Rice  v.  Fidelity  &  Dep.  Co.,  103 

there  could  be  a  recovery,  although  Fed.    427,    43    C.    C.    A.    270    (1900) 

the  loss  was  caused  by  the  failure  [citing  American,   etc.,   Indem.   Co. 

to  make  such  examination.  v.   Wood,   73   Fed.   81,   19   C.   C.   A. 

31  Harbour  Commissioners  v.  Guar-  264    (1896);    American,  etc.,  Indem. 

antee    Co.,    22    Can.    Sup.    Ct.    542  Co.    v.    Carrollton    Furn.    Mfg.    Co., 

(1894).  So,  where  the  contract  pro-  95  Fed.  Ill,  36  C.  C.  A.  671  (1899)]. 
vided  that  the  books  should  be  bal- 


465  CREDIT   INSURANCE.  §    420 

in  a  bond  of  indemnity  against  the  dishonest  acts  of  their  employe, 
to  the  effect  that  they  will  invariably  apply  certain  checks  to  his 
action,  which  the  parties  expressly  agree  by  the  statement  itself  and 
the  bond,  shall  be  the  basis  of  the  latter,  and  a  condition  precedent 
to  a  recovery  upon  it,  is  of  the  nature  of  a  warranty,  and  not  a  repre- 
sentation, and  a  failure  to  comply  with  the  promise  it  contains  is 
fatal  to  an  action  upon  the  bond." 

717.     Credit  Insurance. 

§  420.  In  general. — The  practice  of  insuring  merchants  and  trad- 
ers against  loss  through  the  insolvency  or  dishonesty  of  their  cus- 
tomers is  of  very  recent  origin.35  Massachusetts  seems  to  be  the  only 
state  that  does  not  recognize  such  contracts  as  insurance,  and  it  is 
there  held  that  they  are  invalid  whether  made  by  domestic  or  foreign 
corporations,  because  not  authorized  by  the  insurance  statutes.86 

It  has  been  contended  that  the  relation  between  the  parties  to  such 
a  contract  is  that  of  principal  and  surety,  but  the  courts  have  re- 
fused to  accept  this  view.  In  a  recent  case  it  was  said:87  'In- 
surance against  mercantile  losses  is  a  new  branch  of  the  business  of 
underwriting,  and  but  few  cases  dealing  with  policies  of  that  char- 
acter have  as  yet  found  their  way  into  the  courts.  The  necessarily 
nice  adjustments  of  the  respective  proportions  of  loss  to  be  borne  by 
insurer  and  insured,  the  somewhat  intricate  provisions  which  are 
required  to  make  such  business  successful,  and  the  lack  of  experience 
in  formulating  stipulations  to  be  entered  into  by  both  parties  to 
such  a  contract,  have  naturally  tended  to  make  the  forms  of  the 
policy  crude  and  difficult  of  interpretation.  *  *  *  The  cases 
cited  by  defendant  in  error  holding  that  the  surety  is  'a  favorite  of 
the  law/  and  that  a  claim  against  him  is  strictissimi  juris,  have  no 
application.  Cdrporations  entering  into  contracts  like  the  one  at 
bar  may  call  themselves  'guarantee'  or  'surety'  companies,  but  their 
business  is  in  all  essential  particulars  that  of  insurers,  who,  upon 
careful  calculation  of  the  risks  of  such  business,  and  with  such  re- 

35  The  first  case  in  which  such  a        "  Tebbets  v.  Mercantile,  etc.,  Guar. 

contract  came  before  the  courts  was  Co.,  73  Fed.  95,  19  C.  C.  A.  281  (1896). 

Solvency  Mutual  Guar.  Co.  v.  York,  To  the  same  effect,  see  Shakman  v. 

3  Hurl.  &  N.  587  (1858).  United  States,  etc.,  Co.,  92  Wis.  366, 

""Clanm  v.  United  States,  etc.,  Co.,  66  N.  W.  528  (1896);  United  States, 

165  Mass.  501,  43  N.  E.  293   (1896);  etc.,   Co.   v.   Robertson    (N.   J.),    29 

Mass.  Pub.  St.  1887,  ch.  214,  §  78.  Atl.  421  (1894). 
30 — ELLIOTT  INS. 


§    421  LIFE,   ACCIDENT   AND    INDEMNITY   INSURANCE.  466 

strictions  of  their  liability  as  may  seem  to  them  sufficient  to  make  it 
safe,  undertake  to  insure  persons  against  loss,  in  return  for  pre- 
miums sufficiently  high  to  make  such  business  commercially  profit- 
able. Their  contracts  are,  in  fact,  policies  of  insurance,  and  should 
be  treated  as  such."  Such  contracts  are  therefore  to  be  construed  like 
other  contracts  of  insurance.38  The  general  principles  governing 
the  making  of  such  contracts  apply  to  contracts  of  credit  insurance. 

It  was  held  in  England  that  the  rule  requiring  the  utmost  good 
faith  on  the  part  of  the  insured  in  disclosing  facts  affecting  the  risk 
extends  to  instruments  in  the  form  of  a  policy  guaranteeing  the  solv- 
ency of  a  person  who  is  a  surety  for  the  repayment  of  borrowed 
money.39  But,  as  in  cases  of  life  and  fire  insurance,  the  American 
cases  do  not  apply  the  rule  with  reference  to  concealment  so  strictly. 
"We  think  it  is  going  too  far,"  says  Goodrich,  P.  J.,40  "to  say  that 
the  creditor  is  in  all  cases,  and  without  being  inquired  of,  bound  to 
communicate  everything  that  it  is  important  for  the  surety  to  know 
that  would  increase  the  risk.  Under  such  a  rule  no  one  would  ever 
know  when  he  could  rely  upon  a  bond,  and  it  would  lead  to  a  good  deal 
of  litigation.  Besides,  the  duty  of  the  defendants,  when  applying  for 
a  renewal  of  the  bond,  stands  upon  a  different  basis  than  their  duty 
when  applying  for  original  insurance." 

§  421.  Construction  of  policy — Amount  of  recovery. — A  policy 
which  insures  against  loss  on  sales,  sustained  by  the  insolvency  of 
debtors  who  have  assigned  their  property  for  the  benefit  of  creditors, 
covers  an  assignment  under  a  state  statute,  at  common  law,  or.  for 
the  benefit  of  a  single  creditor.  "It  may  be  a  statutory  assignment, 
a  mortgage,  a  confession  of  judgment,  or  some  other  contrivance, 
the  purpose  and  effect  of  which  is  to  dispose  of  all  the  debtor's 
assets  and  disable  him  from  paying  his  debts.  In  such  cases  the  loss 
is  fairly  within  the  scope  of  the  indemnity  secured  by  the  insured  by 
this  policy.  It  is  the  completeness  of  the  transfer  and  its  effect  upon 
the  debtor  in  his  business,  and  not  the  name  or  form  of  the  instrument 
or  transaction,  that  gives  it  character.  Any  transfer  by  a  trader 
or  merchant  of  all  his  stock  in  business,  when  it  covers  substan- 

38  Mercantile,  etc.,  Guar.  Co.  v.  M  Seaton  v.  Heath,  L.  J.  68  Q.  B. 
Wood,  68  Fed.  529,  15  C.  C.  A.  563  D.  630  (1899). 

(1895);  Mercantile  Cred.,  etc.,  Co.  v.  *°  American,  etc.,  Indem.  Co.  v. 
Littleford,  18  Ohio  C.  C.  889  (1899).  Wimpfheimer,  14  App.  Div.  (N.  Y.) 

498  (1897).     See  ch.  v. 


467 


CREDIT   INSURANCE. 


§  421 


tially  all  his  property,  may  be  an  assignment  within  the  meaning  of 
the  policy,  in  spite  of  its  form  or  the  name  given  to  it.  *  *  *  A 
general  assignment,  within  the  meaning  of  the  policy,  may  be  made 
for  the  benefit  of  a  single  creditor  or  all.  It  may  be  in  the  form 
prescribed  by  state  statutes,  or  an  assignment  at  common  law.  The 
form  of  the  transaction  is  not  so  material  as  the  result,  when  it 
operates  to  divest  the  debtor  of  substantially  his  entire  property  and 
closes  out  his  business.  Such  a  transaction  means  insolvency,  within 
the  fair  scope  of  the  indemnity/'41 

Within  the  definition  of  the  term  "insolvency,"  as  defined  in  a 
policy,  was  included  the  return  of  a  writ  of  execution  against  the 
debtor  unsatisfied,  except  where  such  execution  has  been  issued  and 
returned  after  the  appointment  of  a  receiver.  The  policy  required  the 
insured  to  give  notice  within  ten  days  after  learning  of  the  insolvency 
of  a  debtor,  upon  blanks  furnished  by  the  company  and  in  the  man- 
ner described  therein.  The  blank  contained  no  reference  to  insolv- 
ency, but  required  the  insured  to  answer  certain  questions  as  to  the 


41  People  v.  Mercantile  Credit 
Guar.  Co.,  166  N.  Y.  416,  60  N.  E.  24 
(1901).  The  policy  limited  liability 
to  cases  where  "an  execution  has 
been  returned  unsatisfied  on  a  judg- 
ment obtained  *  *  *  for  merchan- 
dise sold  to  said  debtor  during  the 
period  covered  by  this  policy."  It 
was  held  that  a  failure  to  return  an 
execution  until  three  days  after  the 
expiration  of  the  policy  did  not  re- 
lieve the  insurer  from  liability 
where  the  other  requirements  of  the 
policy  had  been  complied  with.  "To 
sustain  the  decision  under  review, 
it  is  necessary  to  hold  that  not  only 
must  the  goods  be  sold  within  the 
life  of  the  policy,  and  a  judgment 
rendered  and  an  execution  issued, 
but  that  it  must  be  returned  un- 
satisfied within  that  time,  which  is 
one  year;  and  that,  too,  when  there 
is  no  language  in  the  policy  or  in 
the  conditions  which  would  warrant 
such  construction.  *  *  *  The  re- 
turn of  the  execution  does  not  con- 


stitute the  main  fact  of  insolvency, 
but  is  simply  evidence  of  that  fact; 
and  if  the  insured,  when  presenting 
his  proof  of  loss  within  the  time 
stipulated,  can  say  that  it  has  then 
been  returned,  that  is  a  compliance 
with  the  terms  of  the  policy."  [Cit- 
ing Sloman  v.  Mercantile,  etc., 
Guar.  Co.,  112  Mich.  258,  70  N.  W. 
886  (1897).]  In  the  same  case  the 
court  said:  "I  can  not  perceive 
that  the  case  of  Talcott  v.  National, 
etc.,  Ins.  Co.,  9  App.  Div.  (N.  Y.) 
433  (1896),  affirmed  in  this  court 
without  opinion,  163  N.  Y.  577,  57 
N.  E.  1125  (1900),  has  any  bearing 
upon  the  questions  now  before  us. 
That  action  was  against  another 
company  upon  a  very  different  in- 
strument. That  case  turned  upon  a 
condition  in  the  contract  to  the 
effect  that  the  insurer  should  not  be 
liable  for  any  loss  of  which  he  did 
not  receive  notice  during  the  life 
of  the  policy." 


§    421  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  468 

failure  of  the  debtor.  The  word  "failure"  was  held  to  be  used  in  its 
commercial  sense,  and  hence  a  confession  of  judgment  by  a  debtor 
who  was  in  business,  and  the  seizure  of  his  stock  by  the  sheriff,  caus- 
ing a  suspension  of  his  business,  was  a  failure,  and  a  report  thereof 
within  ten  days  fulfilled  the  requirement  as  to  notice,  and  a  second 
notice  after  the  return  of  an  execution  unsatisfied  was  not  necessary.42 
A  policy  insuring  the  holder  against  loss  "sustained  by  reason  of  the 
insolvency  of  debtors  owing  the  insured  for  merchandise"  provided 
that  "in  adjusting  losses,  *  *  *  before  determining  the  per- 
centage of  loss  to  be  borne  by  the  company  there  should  first  be  de- 
ducted all  sums  paid,  offered  and  accepted,  settled  and  secured,  and 
the  value  of  any  security  and  collateral."  Under  this  policy  the  loss 
insured  against  was  not  the  whole  amount  due  from  the  insolvent 
debtor  at  the  time  of  his  suspension,  but  the  amount  remaining  due 
after  deducting  any  payments  made  by  the  debtor.  It  was  also  held 
that  the  clause,  "When  only  a  part  of  the  loss  is  covered  by  this  policy, 
a  proportionate  part  of  everything  released  or  secured  by  the  insured 
shall  be  credited  to  so  much  of  it  as  this  policy  covers,"  apparently 
referred  to  cases  where  a  part  of  the  loss  is  covered  by  one  policy  and 
part  by  another.  But  as  it  could  not  be  brought  into  harmony  with 
the  rest  of  the  contract,  and  the  instrument  considered  as  a  whole 

42  American,  etc.,  Indem.  Co.  v.  insured  was  required  to  notify  the 
Carrollton  Fur.  Mfg.  Co.,  95  Fed.  company  within  ten  days  after  re- 
111,  36  C.  C.  A.  671  (1899);  Talcott  ceiving  information  of  any  insol- 
v.  National,  etc.,  Ins.  Co.,  9  App.  vency  or  loss,  and  it  was  provided 
Div.  (N.  Y.)  433  (1896).  A  bond  in  that  final  proof  of  loss  should  be 
this  case  provided  "that  in  case  the  made  at  the  home  office  of  the  corn- 
second  party  shall  suffer  losses  in  pany  within  thirty  days  after  the 
his  business  during  said  period  of  expiration  of  the  bond,  and  that  in 
this  bond  by  reason  of  the  insol-  the  event  of  loss  occurring  within 
vency  by  legal  process  of  any  party  the  life  of  the  bond,  of  which  the 
or  parties  to  whom  said  second  obligor  had  not  received  notifica- 
party  shall  have  sold  and  delivered  tion  before  the  termination  of  the 
goods  during  the  period  of  this  bond,  such  loss  should  not  be  prova- 
bond,  *  *  *  or  by  reason  of  ble  under  this  policy.  Proof  could 
any  judgment  or  decree  of  court  not  be  made  of  claims  for  goods 
obtained  for  goods  so  delivered  which  had  been  sold  during  the 
within  said  period  of  this  bond,  period  covered  by  the  bond  but  on 
upon  which  execution  shall  have  which  no  judgment  had  been  ob- 
been  returned  unsatisfied  over  tained  or  execution  returned  un- 
and  above  said  losses,  then  the  satisfied  until  after  the  expiration 
obligor  would  indemnify  the  plain-  of  the  term  of  the  bond, 
tiff  as  stated  in  the  bond."  The 


469  TITLE   INSURANCE.  §    422 

was  ambiguous,  that  meaning  should  be  given  it  which  is  most  favor- 
able to  the  insured.43 

Where  the  policy  insured  against  loss  by  insolvency  of  debtors  owing 
for  merchandise  "sold  between  April  1,  1893,  and  March  31,  1894," 
and  provided  that  the  policy  should  "expire  on  March  31,  1894," 
and  that  proofs  of  loss  must  be  presented  within  ninety  days  after 
the  expiration  of  the  policy,  and  that  no  loss  should  be  paid  until 
presented  in  such  proofs,  except  that  if  the  policy  should  be  renewed, 
losses  occurring  after  such  expiration  in  sales  made  during  its  ex- 
istence were  payable,  it  was  held  that  the  company  was  liable  for 
losses  occurring  after  the  expiration  of  the  policy  on  sales  made  dur- 
ing its  existence,  although  the  policy  was  not  renewed.  The  court 
said:44  "We  are  of  the  opinion  that  the  fairer  view  to  take  is  that 
the  provision  in  relation  to  the  expiration  of  the  policy  refers  to  the 
time  when  sales  to  be  covered  thereby  shall  cease,  and  that  it  does  not 
determine  the  time  when  losses  must  occur  upon  such  sales,  but  that 
these  shall  be  recoverable,  regardless  of  that  date,  subject  to  the  lim- 
itation as  to  final  proof.  This  conclusion  is  justified  by  the  rule 
that  any  ambiguity  in  an  instrument  is  to  be  resolved  against  the 
draftsman." 

§  422.  Identity  of  the  insured. — In  guaranty  insurance  we  find  a 
principle  somewhat  analogous  to  that  of  change  in  interest  or  title 
in  fire  insurance.  Two  partners  were  insured  agamst  loss  by  uncol- 
lectible debts,  under  a  policy  which  provided  that  "if  any  member 
guaranteed  with  respect  to  his  gross  or  particular  trade  debts  shall 
cease  to  be  such  trader,  his  guarantee  or  contract  shall  become  void  on 
his  retiring  from  such  trade,"  and  it  was  held  that  the  retirement  of 
one  partner  invalidated  the  contract.46  Under  such  a  policy  the 
death  of  a  partner  effects  such  a  change  in  the  firm  as  will  release  the 
insurer.46 

IV.     Title  Insurance. 

j 

§  423.  Insurance  of  titles — Construction. — There  are  but  few 
cases  construing  contracts  of  title  insurance.  Apparently  the  gen- 

43  Mercantile    Credit,    etc.,    Co.    v.  "  Solvency  Mut.  Guar.  Co.  v.  Free- 
Wood,  68  Fed.  529,  15  C.  C.  A.  563  man,  7  Hurl.  &  N.  17  (1861). 
(1895).  "Cosgrave   Brewing,   etc.,   Co.   v. 

44  Sloman  v.  Mercantile,  etc.,  Guar.  Starrs,  5  Ont  189   (1884);   Pember- 
Co.,    112    Mich.    258,    70    N.    W.    886  ton  v.  Oakes,  4  Russ.  154   (1827): 
(1897). 


§    423  LIFE,    ACCIDENT   AND   INDEMNITY   INSURANCE.  470 

eral  principles  governing  insurance  contracts  apply  to  contracts  of 
this  nature.  Thus,  when  such  a  policy  contains  a  condition  which 
renders  it  void  from  its  inception,  and  this  is  known  to  the  insurer 
when  the  policy  is  issued,  the  condition  is  waived.47 

The  refusal  of  an  adjoining  owner  to  make  compensation  for  the 
use  of  a  party  wall  does  not  constitute  an  incumbrance  within  the 
meaning  of  a  policy  which  guarantees  the  title  of  real  estate  against  all 
liens  or  incumbrances.48  The  words  "tenancy  and  present  occupants," 
used  in  such  a  policy  as  a  defect  in  the  title  not  insured  against,  do 
not  include  a  claim  of  one  in  actual  adverse  possession  asserting 
ownership  in  fee  against  the  title  insured.  They  refer  to  the  tenancy 
which  arises  through  occupation  or  temporary  possession  of  the  prem- 
ises by  those  who  are  tenants  in  the  popular  sense  of  the  word.49 
A  condition  that  "no  right  of  action  shall  accrue  unless  the  insured 
has  contracted  to  sell  the  estate  or  interest  insured,  and  the  title  has 
been  declared  by  a  court  of  last  resort  and  competent  jurisdiction 
defective  or  incumbered,  by  reason  of  a  defect  or  incumbrance  for 
which  the  company  would  be  liable  under  this  policy,"  does  not  apply 
in  an  action  on  the  policy  where  the  land  was  in  actual  adverse 
possession  of  another  at  the  time  the  policy  was  issued,  and  had  been 
actually  lost  by  reason  of  a  defect  in  the  insured's  title.50 

A  policy  issued  to  the  holder  of  a  mortgage  on  certain  real  estate 
insured  him  to  the  amount  named  against  loss  through  defects  in 
the  title  to  the  real  estate,  or  by  liens  or  incumbrances  thereon  ex- 
isting at  the  date  of  the  policy.  It  provided  that  no  right  of  action 
should  accrue  until  the  insured  had  conveyed  or  agreed  to  convey 
to  the  company  his  interest  in  the  property  at  a  price,  which,  in  case 
of  title  acquired  through  foreclosure,  should  be  the  amount  bid  at 
the  foreclosure  sale,  and  that  payment,  discharge  or  satisfaction  of 
the  mortgage  indebtedness,  except  by  foreclosure  of  the  mortgage, 
should  annul  the  policy,  and  that  the  insurance  company  should 
have  an  opportunity  to  defend  any  suit  affecting  the  title.  Suits 

4TQuigley  v.  St.  Paul  Title  Ins.,  "  Thomas   v.   Tradesmen's   Trust, 

etc.,   Co.,   60   Minn.    275,   62   N.   W.  etc.,  Co.,  21  Pa.  Co.  Ct.  151,  7  Pa. 

287    (1895).     See  this  case  for  the  Dist.  R.  375  (1898). 

liabilities  assumed  by  the  insurance  *•  Place  v.  St.  Paul  Title  Ins.,  etc., 

company  when  it  assumes  to  defend  Co.,   67  Minn.   126,  64  Am.   St.  404 

against    claims    on    the    mortgaged  (1897). 

premises.    The  same  case  was  again  °°  Place  v.  St.  Paul  Title  Ins.,  etc., 

before  the  court  in   64   Minn.   149,  Co.,   67   Minn.  126,   64  Am.   St.   404 

66  N.  W.  364.  (1897). 


471  TITLE    INSURANCE.  §   423 

were  brought  to  establish  mechanics'  liens  on  the  property,  which 
were  unsuccessfully  defended  by  the  company.  The  property  was 
then  sold  to  satisfy  the  liens  and  the  insured  foreclosed  his  mortgage 
by  publication,  and  at  the  sale  bought  it  in  for  the  amount  due  on 
the  mortgage,  with  interest  and  costs.  The  insured  having  died,  his 
representatives  offered  to  convey  to  the  title  insurance  company 
for  the  amount  bid  at  the  foreclosure  sale,  and  demanded,  in  default 
of  purchase  for  that  amount,  that  the  company  redeem  the  property 
from  the  sale  under  the  mechanics'  liens.  This  it  declined  to  do, 
and  the  insured's  representatives  redeemed  the  property  and  brought 
suit  against  the  insurance  company  for  the  amount  so  paid.  It  was 
held  that  the  purchase  of  the  property  by  the  insured  at  the  fore- 
closure sale  for  the  amount  due  on  his  mortgage  did  not  cancel  his 
mortgage  debt  and  thus  annul  the  policy,  and  that  the  title  insurance 
company  was  bound  either  to  buy  the  property  for  the  amount  bid 
at  the  sale  or  to  redeem  it  from  the  sale  under  the  liens,  and  that 
the  plaintiffs  were  entitled  to  recover  the  amount  paid  by  them  for 
that  purpose.  "The  contract,"  said  the  court,51  "is  plain  and  ex- 
plicit on  this  point.  In  a  word,  it  is  a  guaranty  that  the  mortgagee 
shall  not  suffer  any  loss  or  damage  by  reason  of  defects  in  the  title 
to  the  property,  or  liens  or  incumbrances  thereon  existing  at  the  time 
of  the  policy.  Under  this  guarantee,  if  the  mortgage,  with  a  clear 
title,  and  free  from  incumbrances,  was  worth  the  amount  of  the 
mortgage  debt,  the  mortgagee  can  confidently  rely  on  the  sufficiency 
of  his  security.  The  mechanics'  liens  upon  which  the  property  was 
sold  were  liens  upon  the  property  at  the  date  of  the  policy.  The  de- 
fendant company  nevertheless  refused  either  to  pay  this  prior  lien, 
or  to  pay  the  insured  the  amount  bid  for  the  property  at  the  fore- 
closure sale,  which  was  the  amount  of  the  mortgage  debt,  thus  forcing 
the  insured,  in  order  to  protect  his  security  and  his  title,  to  redeem 
the  property  from  the  sale  under  the  mechanics'  liens. 
Under  the  terms  of  the  policy  the  mortgagee  had  a  right  to  look  to 
the  defendant  for  the  extinguishment  of  all  liens  on  the  property 

81  Minnesota  Title  Ins.,  etc.,  Co.  v.  George    v.    Goldsmiths',    etc.,    Ins. 

Drexel,  70  Fed.  194   (1895).     There  Ass'n,  67  L.  J.  (Q.  B.  D.)  807,  78  L. 

are    many    other    kinds    of    risks  T.  Rep.  813  (1898).    As  to  insurance 

which  are  insured  against,  but  the  against  loss  of  rents,  see  Heller  v. 

cases  construing  such  contracts  are  Royal  Ins.  Co.,  133  Pa.  St.  152,  1 

few  and  not  yet  of  great  importance.  Atl.  349,  7  L.  R.  A.  411  (1890).    See 

As  to  insurance  against  theft,  see  §  7,  supra. 


§   423  LIFE,   ACCIDENT   AND   INDEMNITY   INSURANCE.  472 

which  existed  at  the  date  of  the  policy,  and  to  gauge  his  bid  on  the 
assumption  that  the  defendant  would  discharge  his  obligation  in 
this  regard." 

A  policy  insured  against  "all  loss  by  reason  of  defects  6r  unmar- 
ketableness  of  the  title  to  the  estate  or  interest  insured,  or  because 
of  liens  or  incumbrances,  charging  the  same  at  the  date  of  this  policy, 
saving  the  defects,  liens  or  incumbrances  excepted  in  schedule  B." 
This  schedule  provided  that  "unmarketableness  by  reason  of  the  pos- 
sibility of  mechanics'  and  municipal  liens  is  excepted  from  this  in- 
surance, but  actual  losses  by  reason  of  such  liens,  or  by  reason  of  the 
non-completion  of  the  building  now  in  process  of  erection  on  the  prem- 
ises, unless  such  building  should  happen  to  be  destroyed  by  fire,  are 
hereby  insured  against."  It  was  held  that  claims  for  municipal  work 
done  three  years  after  the  policy  was  issued  were  not  within  the 
policy.62 

B  Wheeler    v.    Real    Estate    Title  Ins.,  etc.,  Co.,  160  Pa.  St.  408,  28  Atl. 

849   (1894). 


INDEX 


[References  are  to  Sections.] 
ACCEPTANCE, 

of  assessments  after  death,  141. 
of  assessments,  when  a  reinstatement,  142. 
of  benefits  as  ratifying  additional  insurance,  246. 
of  order  in  payment  of  premiums,  129. 

of  premium  sent  after  loss,  burden  of  proving,  131,  note  50. 
of  premium,  waiver  of  condition  against  removal,  183. 
of  premium,  when  not  ratification  ol!  issuance  of  policy  by  agent,  166. 
of  promissory  notes  in  payment  of  premiums,  130. 
See  PAYMENT  OF  PREMIUM;  PREMIUM;  PROMISSORY  NOTES;  WAIVEB. 

ACCEPTANCE  OF  POLICY, 

assent  to  new  conditions  not  implied,  when,  129. 

holder  estopped  to  set  up  powers  in  agent  in  opposition  to  terms 

of,  183. 

insured  charged  with  knowledge  of  contents,  257. 
terms  are  binding,  245. 

ACCIDENT  INSURANCE, 

construction  of  provisions, 

as  to  external,  violent  or  accidental  injuries,  392. 
signs  of,  396. 

as  to  inhaling  gas,  394. 

as  to  occupation  or  employment,  395. 

as  to  poison,  394. 

as  to  risks  of  travel,  393. 
defined,  7. 
definition  of  accident,  391.  * 

illustrations,  391,  392. 
excepted  risks, 

bodily  infirmity  or  disease,  399. 

injuries  intentionally  inflicted  by  others,  400. 

injuries  received  while  in  violation  of  law,  401. 
while  intoxicated,  402. 

negligence,  effect  of,  397. 

voluntary  exposure  to  unnecessary  dangers,  398. 

(473) 


474  INDEX. 

[References  are  to  Sections.} 
ACCIDENT  INSURANCE— Continued, 
general  provisions, 

amount  of  recovery,  disability,  403. 

construction  of  conditions,  effect  of  existing  judicial  decisions, 

404. 

how  far  a  contract  of  indemnity,  20. 
in  general,  390. 

ACTIONS, 

to  enforce  assessments,  137. 
by  receiver,  140. 

ACTIONS  AGAINST  COMPANIES, 
by  mortgagees,  341. 
under  employers'  liability  policy,  effect  of  judgment  recovered  by 

employe,  414. 
when  may  be  brought,  328,  329. 

ADDITIONAL  INSURANCE, 

soliciting  agent  can  not  bind  company  for,  155. 

See  OTHER  INSURANCE. 
ADJUSTERS, 

waiving  forfeiture,  155,  181,  note  16. 
waiving  preliminary  proofs  of  loss,  155,  311. 

See  AGENTS  OF  COMPANIES;  POWEES  OF  AGENTS. 
AGE, 

condition  as  to  statement  of,  p.  402. 

AGENT, 

failure  to  impart  knowledge  to  principal,  92,  93. 

in  possession,  with  power  of  attorney  to  sell,  insurable  Interest,  48. 

insuring  for  owner,  48,  note  39. 
of  express  company,  payment  of  premium  to,  129. 
of  foreign  company,  restrictions  upon,  151. 
of  insured  canceling  policy  without  authority,  298. 

concealment  or  misrepresentation  by,  92,  93,  113. 

is  an  "insurance  agent,"  150. 
representing  both  parties,  agreeing  to  cancellation,  298. 

AGENTS  OF  COMPANIES, 

"apparent  or  ostensible  authority,"  defined,  158. 

what  based  on,  153. 
application  prepared  by,  161,  162. 

giving  advice  as  to  filling  out,  152. 
authorization,  provision  in  standard  policy  as  to,  223. 
bond  of,  liability  of  sureties  on,  166,  note  90. 
broker,  defined,  157. 
character  of  agency,  limitations,  154. 
collecting  agent,  waiver  of  conditions  by,  155. 
collusion  with  applicant,  190. 


INDEX.  475 

[References  are  to  Sections.'] 
AGENTS  OF  COMPANIES— Continued, 
consenting  to  other  insurance,  249. 

to  removal  of  stock,  183. 
countersigning  policy,  32. 
designation  of,  154. 
estoppel  by  acts  of,  187. 
evidence  to  show  agency,  153. 
exceeding  authority,  154. 
fraud  of,  knowledge  of  company,  recovery  of  premiums,  67,  135. 

repudiation  by  company,  161. 

fraudulent  representations  by,  rescission  of  contract,  188. 
general  agent,  denned,  154. 

liability  of  company  for  acts  of,  156. 
general  and  special,  distinction  abolished  by  statute,  154. 
"insurance  agent,"  definition,  150. 

name  applies  to  agent  of  insured,  150. 

issuing  policy  without  authority,  acceptance  of  premium  not  rati- 
fication of  his  act,  166. 
knowledge  of  matters  not  stated  in  application,  188. 

acquired  in  another  business,  164. 

as  to  construction  of  building  insured,  214. 

as  to  other  insurance,  249. 
local  agent,  notice  of  loss  to,  165. 
medical  examiner  is,  155,  note  21. 

no  inference  of  general  authority,  155,  note  21. 
misrepresentations  by,  estoppel,  187. 
mistake  in  describing  subject-matter,  187. 
notice  to,  when  notice  to  company,  164. 
oral  agreement  to  issue  policy,  27. 

effect  of  subsequently  signed  application,  154. 
payment  of  premiums  to,  129. 

accepting  and  discounting  note  and  receipting  for  premium,  130. 

receiving  overdue  premiums  after  death,  131. 

waiving  cash  payment,  129  and  note  23,  184,  186. 
policy  issued  upon  application,  company  can  not  deny  agency  of 

solicitor,  153. 
powers,  limitations,  158,  159. 

restrictions  as  to  locality,  154,  note  18. 
relation  to  third  parties,  general  or  special,  154. 
rights  and  liabilities,  166. 
secret  instructions  to,  158,  160. 
soliciting  agent,  limitations  of  authority,  155. 
special  agent,  defined,  154. 

duty  to  learn  extent  of  authority,  155. 

no  inference  of  general  authority,  155,  note  21. 
statutory  provisions  relating  to,  151. 

construction  of,  152. 
who  are  not,  164. 
See  ADJUSTEES;  BBOKEBS;  CLEBKS  OF  AGENTS;  POWERS  OF  AGENTS. 


476  INDEX. 

[References  are  to  Sections.'} 
AGREEMENT  TO  INSURE, 

made  orally  by  agent,  27. 

subsequently-signed  application  will  not  avoid,  when,  154. 
made  orally  by  soliciting  agent,  155. 

ALIEN, 

insured  against  capture  of  property  by  government  of  insurer,  14. 
right  to  insurance,  11. 

ALIENATION, 

by  assignment  and  bankruptcy  proceedings,  278. 

by  change  of  possession,  280. 

by  contract  of  sale,  knowledge  of  agent,  estoppel,  188,  note  35. 

by  legal  process  or  judgment,  275,  276. 

by  partition,  277. 

condition  against,  46,  p.  258. 

breach,  205,  note  15. 

scope  of,  265. 

strictly  construed,  46. 

waiver  by  agent,  185. 
conveyance  to  wife  of  insured,  272. 
defeasible  conveyances,  269. 
executory  contract  of  sale,  effect,  267. 
invalid  conveyances,  270. 
lease,  when  not  breach  of  condition,  281. 

of  real  estate,  effect  on  policy  as  to  personal  property,  225,  note  190. 
sale  with  purchase-money  mortgage,  271. 
transfer  between  joint  owners,  274. 

between  partners,  273. 

between  tenants  in  common,  274. 

of  part  interest,  266. 

of  title,  by  death,  279. 

voluntary  conveyance,  no  consideration,  270. 

See  CONVEYANCE  OF  REAL  ESTATE;  FRAUDULENT  CONVEYANCE;  INCTTM- 
BBANCES;  INSUBABLE  INTEBEST;  STANDARD  POLICY;  TITLE  AND  OWNER- 
SHIP. 

ALTERATIONS, 

in  adjoining  buildings,  254. 

made  in  violation  of  condition  as  to,  256. 

placing  and  operating  engine  fifty  feet  away,  256. 

See  STANDABD  POLICY. 
APPLICATION, 

affirmative  and  promissory  representations,  110. 

oral,  111. 

agent  giving  advice  as  to  filling  out,  152. 
agent  preparing,  and  writing  answers,  161,  162. 


INDEX.  477 

[References  are  to  Sections.} 
APPLICATION— Continued, 

mistake,  estoppel,  187. 

true  answers  wrongfully  recorded,  188. 

warranties  incorrectly  written,  188,  note  40. 

writing  erroneous  statements  in,  oral  evidence  to  show,  189. 

writing  untrue  answers,  insured  consenting,  190,  note  49. 
agent  taking  is  agent  of  insurer,  151,  152. 
answers  to  specific  inquiries,  84. 

insured  admitting  falsity,  burden  of  proof  as  to  materiality,  118. 
attached  to  policy,  duty  to  know  contents,  161. 
conditions  in  as  to  powers  of  agents,  construction,  160a. 
construction  of  statements  in,  105,  106. 

as  to  bodily  injuries,  376. 

as  to  expectation  or  belief,  109. 

as  to  family  relationship,  378. 

as  to  habits,  374. 

as  to  health,  375. 

as  to  medical  attendance,  377. 

as  to  other  insurance,  379. 

interpretation  of  agent,  359,  note  75. 

as  to  rejection  by  other  companies,  380. 

as  to  supervision  of  employes,  419. 
continuing  warranties,  110. 
evasive  answers,  88. 

false  and  material  representations  in,  effect,  114. 
false  statements  in,  knowledge  of  agent,  164,  188,  note  35. 
incomplete  answers  to  inquiries,  87. 
indorsement  of  insured's  consent  thereon,  67. 
material  facts,  what  are,  90. 

duty  to  give,  79. 
nature  of,  78. 

oral,  concealment  without  representation,  86. 
part  of  contract,  106,  224,  367a. 
positive  statements,  binding  force,  109. 

provision  against  fraud  of  agent,  recovery  of  premiums,  135. 
restrictions  in  on  powers  of  agent,  159. 

notice  to  insured,  160,  161. 
warranty,  mistake,  good  faith  answer,  108a. 
what  facts  must  be  disclosed,  83. 

written,  presumed  all  material  representations  are  contained,  H 
See    CONCEALMENT;    FRAUD;    LIFE    INSURANCE    POLICY;    MISREPRESENTA- 
TIONS; REPRESENTATIONS  AND  WARRANTIES;  STANDARD  POLICY;  WARRAN- 
TIES. 

APPRAISEMENT, 

See  ARBITRATION  AND  "APPRAISEMENT. 


478  INDEX. 

{.References  are  to  Sections.'] 
ARBITRATION  AND  APPRAISEMENT, 
appraiser  refusing  to  act,  322. 
award,  invalidity  of,  322. 
condition  as  to,  p.  330. 

validity  of,  317. 

condition  precedent  to  an  action,  when,  320. 
demand  for  as  admission  of  liability,  325. 

proofs  of  loss  not  waived,  301. 

when  necessary,  319. 
denial  of  liability  after,  effect,  324. 
disagreement,  what  is,  316. 
in  case  of  total  loss,  318. 

insurer's  right  to  repair  or  rebuild  after,  327. 
manner  of  conducting  inquiry,  322. 
mortgagee  not  a  party  to,  when,  326. 
resubmission,  when  necessary,  324. 

waiver  of  by  insurer,  324. 
revocation  of  condition,  321. 
waiver  of,  what  is,  323. 

See  AWAKD  OF  APPRAISERS. 

ASSESSMENT  COMPANIES, 

See  BENEFIT  SOCIETIES;  CERTIFICATE  OF  MEMBERSHIP;   MUTUAL  COMPANIES. 

ASSESSMENTS, 

acceptance  after  death,  141. 

date  of  notice,  what  is,  134,  note  66. 

determination  of  rate,  136. 

change  of  rate,  126. 

stockholder  voting  to  increase,  136. 

ignorance  of  terms  of  contract  no  ground  for  recovery,  135. 
in  mutual  company,  on  premium  notes,  liability  limited,  133,  note  61. 
levy  and  collection,  136. 

by  receiver,  140. 
liability  for,  137. 

how  affected  by  withdrawal,  139. 
nature  and  payment,  125. 

non-payment,  effect,  application  of  dividends,  138. 
on  premium  note,  limit  of  liability,  136. 
paid  in  anticipation  for  year,  none  made,  138,  note  83. 
statutes  fixing  amount,  137. 

unpaid,  not  a  debt  where  benefits  are  forfeited,  127. 
waiver  of  by-laws  as  to,  by  officers,  143. 
waiver  of  time  of  payment,  143. 

See  MUTUAL  COMPANIES;   BENEFIT  SOCIETIES. 


INDEX.  479 

[References  are  to  Sections.] 
ASSIGNEE, 

assigning  policy  to  third  person,  recovery,  66,  note  67. 
insurable  interest  in  property  of  an  insolvent,  48. 
of  life  policy,  insurable  interest,  60. 

without  insurable  interest  can  not  set  up  incontestable  clause,  68. 
protected  as  to  advancements  for  premiums,  62. 
recovery  of  premiums  paid,  67. 

rule  in  Alabama,  Kansas,  Kentucky,  North  Carolina,  Pennsyl- 
vania, Tennessee,  Texas,  and  federal  courts,  62. 
rule  in  California,  Colorado,  Georgia,  Illinois,  Indiana,  Mary- 
land, Massachusetts,  Mississippi,  New  York,  Ohio,  Rhode 
Island,  South  Carolina,  Vermont,  Wisconsin,  England,  and 
Canada,  63. 

See  INSTJRABLE  INTEREST. 

ASSIGNMENT  FOR  BENEFIT  OF  CREDITORS, 
alienation  by,  278. 
assignee  no  insurable  interest  after  debt  paid,  60. 

ASSIGNMENT  OF  POLICY, 

assignability,  362. 

assignee  enforcing  payment,  362. 

by  assignee,  365. 

by  creditor  assignee  to  third  person,  recovery,  66,  note  67. 

condition  as  to,  p.  403. 

construction  of,  282. 
consent  of  soliciting  agent,  155. 
manner  of  making,  364. 
notice  to  company,  363. 
"payable  as  interest  may  appear,"  206. 
to  creditor  as  security,  rights  of  personal  representatives  of  insured, 

58. 

to  one  without  insurable  interest,  58. 
See  INSURABLE  INTEREST;  LIFE  INSURANCE  POLICY;  STANDARD  POLICY. 

AUNT, 

insurable  interest  in  life  of  dependent  niece,  66. 

AWARD  OF  APPRAISERS, 

impeachment,  burden  of  proof,  presumption  of  validity,  322. 
refusal  or  election  to  abide  by,  effect,  324. 

See  ARBITRATION  AND  APPRAISEMENT. 

B 

BAD  FAITH, 

collusion  between  applicant  and  agent,  190. 

BAILMENT, 

insurable  interest  of  bailee,  47. 


480  INDEX. 

[References  are  to  Sections.] 
BANKRUPTCY, 

proceedings  in  as  alienation,  278. 

right  of  insolvent  insured  to  proceeds  of  policy,  357. 

BARN, 

when  included  in  term  "dwelling  house,"  217. 

BENEFICIARIES, 

creditor  named  as,  no  insurable  interest  after  debt  paid,  60. 

definition,  352. 

how  designated,  construction,  352. 

insurable  interest  unnecessary  where  insured  makes  contract  and 

pays  premiums,  61. 
nature  of  interest,  354. 

of  certificate  in  benefit  society,  fiancee  of  holder  may  be,  66. 
of  policy,  fiancee  of  the  insured  may  be,  66. 
paying  premiums,  no  insurable  interest,  recovery,  when,  61. 
proofs  of  loss,  duty  to  make,  when,  11. 
reservation  of  right  to  change,  355. 

manner  of  changing  in  mutual  companies,  356. 
right  to  fund,  352. 
suicide  of  insured,  effect,  369. 
transmission  of  interest,  353. 
vested  right  in  policy,  when,  354,  355. 
who  may  be,  352,  note  2. 

See  INSURABLE  INTEREST;  PAYEE  OF  LIFE  INSURANCE. 

BENEFIT  SOCIETIES, 

assessments  and  dues,  nature,  payment,  125. 
assessments,  liability  for,  137. 

accepted  after  death,  141. 

non-payment  of,  effect,  138. 

application  of  dividends,  138. 

assessments  unpaid,  forfeiture  of  benefits,  dues  not  a  debt,  127. 
certificate  in  is  not  "other  insurance,"  13. 
certificate  payable  to  a  person  "dependent"  on  deceased,  fiancee  not 

dependent,  66. 

continuity  of  insurable  interest,  wife  obtaining  divorce,  effect,  60. 
death  or  loss  during  suspension  from  membership,  141. 
insolvency,  assessments  by  receiver,  140. 
organization  and  status,  136. 
regulation  of,  13. 

payment  of  assessments,  waiver  of  requirements,  143. 
reinstatement  of  members,  142. 
stepfather  may  be  beneficiary  of  certificate,  66. 
waiver  of  by-laws  by  officers,  143. 
what  are,  13. 

when  can  not  contract  for  endowment  insurance,  13. 
withdrawal  of  member,  liability,  139. 
See  ASSESSMENTS;  CERTIFICATE  OF  MEMBERSHIP;  MUTUAL  COMPANIES. 


INDEX.  481 

[References  are  to  Section*.] 
BINDING  CLAUSE, 

effect  of,  203. 
BOOKS, 

See  RECORDS. 
BROKERS, 

agent  of  insured,  when,  157. 

of  insurer,  when,  157. 
defined,  157. 

delivery  of  policy  to,  157. 
in  another  state,  risk  placed  through,  liability  of  agent  under  a 

statute,  151. 
limitations  of  authority,  157. 

rule  in  Indiana,  Massachusetts,  Pennsylvania,  and  Texas,  157. 
notice  to  of  cancellation  of  policy,  298. 

See  AGENTS  OF  COMPANIES;  POWERS  OF  AGENTS. 

BROTHER  AND  SISTER, 

insurable  interest  of  sister  in  life  of  brother,  66. 

See  INSURABLE  INTEREST. 
BUILDING, 

description  of,  what  included,  217. 

in  process  of  construction,  insurable  interest  of  contractor,  48. 
of  owner,  48. 
policy  covers  after  completion,  217. 

See  FALL  OF  BUILDING;  TOTAL  Loss. 

BURDEN  OF  PROOF, 

as  to  materiality  of  concealment  or  misrepresentation,  118. 

of  untrue  answer,  admitted  to  be  untrue,  118. 

of  warranty,  118. 

to  show  acceptance  of  note  as  payment,  358. 
to  show  acceptance  of  premium  sent  after  loss,  131,  note  50. 
to  show  articles  lost  by  fire  are  excepted  from  insurance,  236. 

written  description  controls,  236. 
to  show  award  invalid,  322. 
to  show  change  in  date  of  expiration,  208. 

to  show  compliance  with  statute  as  to  notice  of  maturity  of  pre- 
miums, 134. 

to  show  insurable  interest,  69. 
to  show  payment  of  first  premium,  358. 
to  show  policy  not  in  force,  208. 
to  show  sister's  want  of  insurable  interest,  66. 
to  show  suicide,  presumption,  371. 

See  EVIDENCE;  PAROL  EVIDENCE;  PRESUMPTIONS. 

BY-LAWS, 

as  to  arbitration,  317. 

as  to  payment  of  premiums,  waiver,  128. 

31 — ELLIOTT  INS. 


482  INDEX. 

[.References  are  to  Sections.'} 
BY-LAWS— Continued, 

certificate  payable  to  a  person  "dependent"  upon  deceased,  fiancee 

not  dependent,  66. 
waiver  by  officers,  143. 

See  BENEFIT  SOCIETIES;  MUTUAL  COMPANIES. 

c 

CANCELLATION, 

acts  amounting  to,  300. 

attempt  to  rescind  is  not,  299. 

agent  liable  to  company,  when,  166. 

authority  of  agent,  298. 

by  broker  employed  to  procure  insurance,  157. 

condition  as  to,  p.  298. 

mortgagee  consenting,  without  notice  to  insured,  296. 

notice  to  be  given,  when,  297. 

served  on  broker,  157,  note  37,  298. 

return  of  premium,  299. 

right  of,  296. 

See  STANDARD  POLICY. 
CAPITAL  STOCK, 

of  mutual  company,  premium  notes  as  part  of,  133. 
CARRIER, 

insurable  interest,  47. 
CASH, 

when  premium  need  not  be  paid  in,  129. 

See  PAYMENT  OF  PREMIUMS. 

CASUALTY  INSURANCE, 

defined,  7. 
CAUSE  OF  DEATH, 

accident,  what  is,  391,  392. 

inhaling  gas,  poison,  liability  under  accident  policy,  394. 

injuries  intentionally  inflicted  by  another,  400. 
murder,  400. 

injuries  received  while  engaged  in  violation  of  law,  401. 

malignant  pustule  resulting  from  contact  with  putrid  animal  mat- 
ter, 399. 

of  relations,  statements  as  to  in  application,  378. 

sunstroke,  399. 

CAUSE  OP  LOSS, 

explosion  of  pipes,  no  fire  ensuing,  221. 
fire  confined  in  furnace,  221. 


INDEX. 

[References  are  to  Sections.} 
CAUSE  OP  LOSS— Continued, 
fire,  when  is,  221,  222. 

flood,  liability  for  damages  caused  by,  233,  note  229. 
heat  without  ignition,  221. 
negligence  of  insured,  right  of  recovery,  22. 

of  third  person,  rights  of  parties,  22. 
short  circuit  in  electric  wires  resulting  from  fire,  222. 

See  EXPLOSION;  FIRE;  SMOKE  DAMAGE;  WATER  DAMAGE. 
CERTIFICATE  OF  LOSS, 
as  to  amount,  309. 
nearest  notary  public,  waiver,  180,  note  10. 

See  Loss;  PROOFS  OP  Loss;  TOTAL  Loss. 
CERTIFICATE  OF  MEMBERSHIP, 

beneficiary  has  no  vested  right  in,  354. 
liens  upon,  what  are  not,  352,  note  3. 
payable  to  fiancee  of  holder,  66. 
whether  constitutes  other  insurance,  379. 
See  BENEFICIARIES;  BENEFIT  SOCIETIES;  MUTUAL  COMPANIES. 
CESSATION  OF  OPERATIONS, 
defined,  251. 

employment  of  watchman  during,  251. 
illustrative  cases,  251. 

CHARTER, 

requiring  written  contract,  effect,  26. 

CHATTEL  MORTGAGES, 

condition  against,  262. 

See  INCUMBRANCES. 
CHECK, 

giving  in  payment  of  premium,  129. 

See  ACCEPTANCE;  PAYMENT  OF  PREMIUMS;  PROMISSORY  NOTES. 

CHILDREN, 

as  beneficiaries,  who  are,  352. 

CHOSE  IN  ACTION, 

valid  policy  assigned  to  a  person  with  no  insurable  interest,  63. 

CLAUSES, 

to  change  conditions  in  New  York  standard  form,  202. 
See  BINDING  CLAUSE;  INCONTESTABLE  CLAUSE;  IRON  SAFE  CLAUSE. 

CLERKS  OF  AGENTS, 

notice  to,  when  notice  to  company,  156. 
powers,  liability  of  company  for  acts  of,  156. 

See  AGENTS  OF  COMPANIES;  BROKERS;  POWERS  OF  AGENTS. 

CLOTHING, 

See  WEARING  APPAREL. 


483 


484  INDEX. 

[References  are  to  Sections.] 
COLLUSION, 

between  applicant  and  agent,  190. 
COMMERCE, 

insurance  is  not,  12. 
COMMISSION  MERCHANTS, 

insurable  interest,  48. 
COMMISSIONS, 

agent's  right  to,  166. 
COMPENSATION, 

for  services,  agent  entitled  to,  166. 
COMPUTATION  OF  TIME, 

last  day  for  notice  of  loss  falling  on  Sunday,  Iowa  rule,  308,  note  45. 

of  maturity  of  premium,  in  New  York,  129,  note  32. 

of  notice  of  maturity  of  premium  in  New  York,  134. 

CONCEALMENT, 

as  ground  for  avoiding  policy,  85. 
by  agent  of  insured,  92,  93. 
by  broker,  157. 
defined,  80. 

materiality  of,  burden  of  proof,  118. 
of  fact  of  other  insurance,  245,  note  3. 
of  facts  not  asked  about,  84. 

of  insolvency  of  guarantor  on  promissory  note,  81. 
of  material  facts,  avoidance  of  policy,  79. 
rule  as  affected  by  character  of  insurance,  81. 
rule  in  United  States,  82. 
through  inadvertence  or  negligence,  91. 
time  of,  89. 
See  APPLICATION;    FRAUD;    MISREPRESENTATIONS;    REPRESENTATIONS  AND 

WARRANTIES;  WARRANTIES. 
CONDITIONS, 

additional,  indorsement  on  policy,  p.  381. 
against  additional  insurance,  waiver  by  agent,  183. 
against  alienation,  see  ALIENATION. 

against  building  on  leased  ground,  261.     See  TITLE  AND  OWNERSHIP. 
against  change  in  interest,  title,  or  possession,  p.  258.     See  TITLE 
AND  OWNERSHIP. 

scope  of  provision,  265. 

against  chattel  mortgages,  262.     See  INCUMBRANCES. 
against  concealment,  p.  201.     See  CONCEALMENT. 

purpose  and  effect,  226. 
against  foreclosure,  263. 

waiver  by  local  agent,  160a,  note  58. 


INDEX.  485 

[References  are  to  Sections.} 
CONDITIONS— Continued, 
against  fraud,  p.  201. 

against  generation  of  illuminating  gas,  264. 
against  increase  of  risk,  253.     See  INCREASE  OF  RISK. 

violation,  effect,  253,  254. 
against  incumbrances,  misrepresentation,  effect,   225.    See  INCUM- 

BBANCES. 

against  misrepresentations,  p.  201.     See  MISREPRESENTATIONS. 

purpose  and  effect,  226. 

against  other  insurance,  see  OTHER  INSURANCE. 
against   prohibited    articles,   pp.    206,    278.     See   EXCLUDED   RISKS; 

PROHIBITED  ARTICLES. 
against  removing  stock,  effect  of  agent's  consenting  to,  183.    See 

REMOVAL. 

against  vacancy,  p.  285.     See  OCCUPANCY;  VACANCY. 
as  to  application  and  survey,  p.  200. 
as  to  arbitration  and  appraisement,  p.  330.     See  ARBITRATION  AND 

APPRAISEMENT. 

validity  of,  317. 

as  to  assignment  of  policy,  pp.  274,  403.     See  ASSIGNMENT  OF  POLICY. 
as  to  authorization  of  agent,  p.  199.     See  AGENTS  OF  COMPANIES. 
as  to  cancellation,  p.  298.     See  CANCELLATION. 
'  as  to  change  of  location,  p.  293.     See  LOCATION;  REMOVAL. 
as  to  construction  of  terms,  p.  381. 
as  to  examination  of  insured,  p.  323. 
as  to  exhibition  of  property  and  records,  p.  323. 
as  to  facts  which  will  defeat  policy,  estoppel  to  assert,  when,  187. 
as  to  forfeiture,  see  FORFEITURE. 

as  to  incontestability,  p.  409.     See  INCONTESTABLE  CLAUSE. 
as  to  interest  being  truly  stated,  p.  201. 
as  to  interest  of  mortgagee,  p.  378. 

as  to  measure  of  damages,  p.  362.  See  MEASURE  OF  DAMAGES. 
as  to  mortgages,  breach,  205,  notes  15,  16.  See  INCUMBRANCES. 
as  to  notice  and  proof  of  loss,  p.  309.  See  NOTICE  OF  Loss;  PROOFS 

OF  Loss. 

as  to  operation  of  manufacturing  establishment,  251. 
as  to  ownership,  257.     See  TITLE  AND  OWNERSHIP. 
as  to  payment  of  premiums,  p.  395.     See  PAYMENT  OF  PREMIUMS. 
as  to  powers  of  agent,  p.  401.     See  POWERS  OF  AGENTS. 
as  to  proofs  of  death,  see  DEATH. 
as  to  prorating  loss,  p.  370. 
as  to  regulations  of  mutual  company,  p.  381. 
as  to  reinsurance,  p.  376. 
as  to  renewal,  p.  293. 

construction,  293,  294. 

as  to  repairing,  rebuilding,  or  replacing  damaged  property,  p.  353. 
insurer's  election,  effect,  327. 


486  TNDEX. 

[References  are  to  Sections.] 
CONDITIONS— Continued, 

as  to  repairs  and  employment  of  mechanics,  256. 

as  to  special  privileges,  p.  411. 

as  to  statement  of  age,  p.  402. 

as  to  subrogation,  p.  372. 

as  to  time  of  bringing  suit,  p.  359. 

as  to  time  of  payment  of  loss,  p.  357. 

as  to  use  of  kerosene  oil,  285. 

as  to  use  of  premises,  see  USE  OF  PREMISES. 

as  to  waiver,  p.  305. 

breach  of,  effect,  205. 

no  recovery  of  premiums  paid,  135. 

waiver  of  forfeiture  by  agent,  158,  note  50. 
Inapplicable  to  subject  insured,  257. 
in  paid-up  policy,  132. 
in  standard  policy,  breach,  effect,  205. 
knowledge  of  agent  that  insured  intends  to  violate,  188. 
materiality,  when  not  open  to  question,  106. 
property  excluded,  p.  215. 

relating  to  interest  in  and  care  of  property,  p.  219. 
requiring  certificate  of  nearest  notary  public,  waiver,  180,  note  10. 
restricting  powers  of  officers  and  general  agents,  163. 
waiver  by  agent,  158,  182. 

by  collecting  agent,  155. 

by  company,  evidence  to  show,  159. 

by  soliciting  agent,  155. 

what  may  be  waived,  180. 
warranties  are,  79. 

See  CONSTRUCTION  OF  CONDITIONS;   LIFE  INSURANCE  POLICY;   STANDARD 

POLICY. 

CONSENT, 

to  insurance,  indorsement  on  application,  67. 

CONSTITUTIONALITY, 

of  statutes  forbidding  discrimination  in  rates,  126. 
of  statutes  providing  for  construction  of  representations  and  war- 
ranties, 119. 

CONSTRUCTION, 

of  charter  provisions  requiring  written  contract,  26. 
of  representations,  107. 

must  be  substantially  true,  115. 
of  representations  and  warranties,  100. 
statutory  provisions,  119. 
in  Massachusetts,  120. 
in  Pennsylvania,  121. 


INDEX.  437 

{.References  are  to  Sections.'] 
CONSTRUCTION— Continued, 

in  Michigan,  Maryland,  Kentucky,  Maine,   Iowa,  Virginia, 

Ohio,  New  Hampshire,  Missouri,  and  Georgia.  122. 
in  Minnesota,  120,  note  73. 
of  statements  in  application,  105,  106. 
of  technical  warranties,  107. 

CONSTRUCTION  OF  CONDITIONS, 
against  alienation,  46. 
against  assignment  of  policy,  282. 
against  building  on  leased  ground,  261. 
against  chattel  mortgages,  262. 
against  foreclosure,  263. 
against  generation  of  illuminating  gas,  264. 
against  increase  of  risk,  253. 
against  suicide,  370. 
against  vacancy,  287. 

when  applied  to  a  dwelling  house,  289. 
as  to  cancellation,  296,  note  385. 
as  to  liability  of  insured  for  acts  of  agent,  188. 
as  to  notice  of  "any  other  insurance  effected,"  245. 
as  to  ownership,  257. 
as  to  prorating  loss,  338. 
as  to  renewal,  293,  294. 

as  to  repairing,  rebuilding,  or  replacing,  327. 
as  to  repairs — employment  of  mechanics,  256. 
as  to  residence,  372. 

as  to  running  manufacturing  establishment  after  hours,  252. 
as  to  statement  of  interest,  227. 
as  to  time  of  bringing  suit,  ,328,  329. 
as  to  time  of  payment  of  loss,  328. 
as  to  use  of  kerosene  oil,  285. 

in  accident  insurance  policy.     See  ACCIDENT  INSURANCE. 
incontestable  clause,  68,  366. 
limiting  powers  of  agents,  160a. 

of  officers  and  general  agents,  163. 

"other  insurance,"  certificate  in  mutual  benefit  society  is  not,  13. 
"true"  and  "untrue"  answers,  108a. 
waiver  in  writing  only,  185. 
See  CONDITIONS;  LIFE  INSURANCE  POLICY;  STANDARD  POLICY. 

CONSTRUCTION  OF  POLICY, 

ambiguous  words  in  description,  210,  213. 

"any  use  or  custom  of  trade  or  manufacture  to  the  contrary,"  force 

and  effect,  283. 

"as  his  interest  may  appear,"  259. 
as  to  property  excluded   from   insurance.    See   EXCLUDED   RISKS; 

PROHIBITED  ARTICLES. 


488  INDEX. 

[References  are  to  Sections.] 
CONSTRUCTION  OF  POLICY— Continued, 
building  and  additions,  216. 
building  in  process  of  construction,  217. 
buildings  adjoined,  etc.,  situated  detached,  217. 
building,  when  counters  and  shelving  included,  217. 
by  soliciting  agent,  155. 
"children,"  who  included,  352. 

"contained  in,"  cases  holding  descriptive  merely,  219. 
covering  goods  in  two  places,  consent  to  remove,  220. 
"dependent,"  who  is,  352. 
description  of  buildings,  what  included,  217. 
description  of  property,  in  general,  210. 

goods  held  in  trust,  211. 
by  warehousemen,  213. 

shifting  stock,  212. 

"direct  loss  or  damage  by  fire,"  what  is,  221,  222. 
"dwelling"  construed  as  description,  not  warranty,  215. 
effect  of  existing  judicial  decisions,  404. 

"elevator  building  and  additions,"  when  warehouse  included,  217. 
entirety  of  contract,  225. 
"fire  engine,  etc.,  contained  in  engine-house,"  damaged  while  away 

from  engine-house,  219. 

"for  or  on  account  of  owner,"  evidence  to  show  owner,  213. 
frame  building,  engine  and  machinery  not  included,  when,  217. 
"from  the  14th  day  of  February,  1868,  until  the  14th  day  of  August, 

1868,"  208. 

"furniture  in  brick  building  and  additions,"  216. 
house,  evidence  to  show  barn  included,  217. 
insured  charged  with  knowledge  of  contents,  257. 
intention  of  parties,  333. 

how  gathered,  106. 
lumber  in  a  "yard,"  216. 
"machinery,"  what  included,  216. 
manufacturing  establishment,  what  included,  216. 
"merchandise,"  what  included,  216. 

"oil  while  contained  in  a  tank,"  tank  swept  away  by  a  flood,  220. 
"on   account  of   whomsoever   it   may   concern,"   evidence   to   show 

owner,  213. 

oral  contract,  how  construed,  24. 
"other  concurrent  insurance  permitted,"  250. 
other  insurance,  "valid  or  invalid,"  247. 
planing  mill  and  addition,  engine  room,  machinery,  etc.,  217. 
plate  glass,  frescoes  and  decorations  not  excepted  from  contract  of 

insurance,  237. 

"pottery  building,"  separate  boiler  house,  217. 
premium  "to  be  paid  in  advance  to  the  company,"  129. 
"rags  and  old  metals,"  evidence  to  show  meaning,  216. 


INDEX.  489 

[References  are  to  Sections.] 
CONSTRUCTION  OF  POLICY— Continued, 

removal  of  property  from  place  insured  at,  illustrations,  220. 

standard  policy,  rule,  204. 

steam   saw  mill   and   machinery,   planing  mill   connected   with  by 
belting,  217. 

"stock  in  trade,"  what  included,  216. 

"waiver  in  writing  only,"  185. 

"while  not  in  use,"  threshing  machine,  etc.,  220. 

See  ACCIDENT  INSURANCE;  CONSTRUCTION  OF  CONDITIONS;  DESCRIPTION; 
EMPLOYERS'  LIABILITY  INSURANCE;  LIFE  INSURANCE  POLICY;  POLICIES; 
STANDARD  POLICY;  WORDS  AND  PHRASES. 

CONTIGUOUS, 

detached  buildings  twenty-five  feet  apart  are  not,  217. 

CONTRACT  OF  INSURANCE, 

against  capture  of  alien's  property  by  government  of  insurer,  14. 

against  fine  or  forfeiture  for  selling  intoxicating  liquors,  14. 

against  injury  from  accidents,  how  far  a  contract  of  indemnity,  20. 

amount  of  insurance,  209. 

by  correspondence,  completion,  rules,  33. 

charter  requiring  written  contract,  effect,  26. 

classification  and  definitions. of  policies,  30. 

completion,  31. 

conditions  relating  to  interest  in  and  care  of  property,  p.  219. 

countersigning  by  agent,  32. 

damages  may  be  liquidated  before  loss,  18. 

delivery  of  policy,  31. 

disclosure  of  material  facts,  83. 

divisibility  of,  effect  of  other  insurance,  250. 

domestic  companies,  control  by  state,  12. 

entirety,  225. 

foreign  companies,  control  by  state,  12. 

form,  in  general,  23. 

in  respect  of  property,  generally  a  contract  of  indemnity,  16. 

is  aleatory,  17. 

is  personal,  and  does  not  run  with  property,  15. 

liberally  construed,  394,  note  38. 

mistake  of  agent  in  describing  property,  187. 

not  binding  until  subject-matter  exposed  to  risks,  16. 

not  within  statute  of  frauds,  25. 

on  intoxicating  liquors  illegally  kept  for  sale,  14. 

on  life  is  not  one  of  indemnity,  19. 

oral,  construction,  24. 

specific  performance,  29. 
parol  agreement  to  alter,  188,  note  35. 


490  INDEX. 

[References  are  to  Sections.'] 
CONTRACT  OF  INSURANCE— Continued, 
parties,  10. 

who  may  be  insured,  11. 
who  may  contract  to  insure,  12. 
in  life  insurance,  351. 

plate  glass,  frescoes  and  decorations  are  within,  237. 
presumption  that  company  knows  nature  of  goods  and  method  of 

doing  business,  214. 
renewal  by  parol,  26. 
renewal,  condition  as  to,  p.  293. 

construction  of  condition,  293,  294. 
repudiation  after  loss,  79. 
retrospective  operation,  208. 
revenue  stamp,  effect  where  none  on  policy,  28. 
risk  essential,  14. 
standard  policy,  24,  200,  et  seq. 
risks  insured  against,  221. 
excluded  risks,  pp.  206,  215. 
statute  requiring  policies  to  be  signed  by  officers  of  company,  oral 

contract  how  affected,  27. 

subrogation  of  insurer  in  fire  and  marine  insurance,  21.     See  SUB- 
ROGATION. 

suspension  by  operation  of  war,  128. 
term  of  insurance,  208. 
what  constitutes,  8. 

See  ACCIDENT  INSUEANCE;  EMPLOYERS'  LIABILITY  INSURANCE;  LIFE  INSUB- 
ANCE;   STANDARD  POLICY;    SUBJECT-MATTER  OF  INSURANCE. 

CONTRACT  OF  MARRIAGE, 

man  may  make  fiancee  the  beneficiary  of  a  policy  or  a  certificate  in 
a  benefit  society,  66. 

CONTRIBUTION, 

as  affected  by  pro  rata  clause,  338. 
CONVEYANCE  OF  REAL  ESTATE, 

defeasible  conveyances,  269. 

executory  contract  of  sale,  267. 

invalid  conveyances,  270. 

voluntary  conveyance,  no  consideration,  effect,  270. 
See  ALIENATION;  FRAUDULENT  CONVEYANCE;,  INSURABLE  INTEREST;   TITLE 

AND  OWNERSHIP. 
CORPORATION, 

insurable  interest  of  stockholder,  48. 

no  insurable  interest  in  life  of  stockholder,  66. 

CREDIT  INSURANCE, 

construction  of  policy,  amount  of  recovery,  421. 
identity  of  the  insured,  422. 
in  general,  420. 


INDEX.  491 

CUSTOM  ^References  are  to  Sections.] 

See  USAGE. 

D 

DAMAGES, 

company  may  recover  from  agent,  when,  166. 
may  be  liquidated,  18. 

See  MEASUEE  OF  DAMAGES;  TOTAL  Loss;  VALUED  POLICY. 
DAUGHTER, 

insuring  life  of  father,  recovery  of  premiums,  135. 
See  BENEFICIABIES;  INSUBABLE  INTEREST. 

DEATH, 

during  suspension  from  membership,  141. 
in  violation  of  law  or  at  hands  of  justice,  373. 

suicide  not  within  provision,  373. 
payment  of  premium  after,  131. 
transfer  of  title  by,  279. 

See  CAUSE  OF  DEATH;  PROOF  OF  DEATH;  SUICIDE. 

DEBTOR  AND  CREDITOR, 

assignment  of  life  policy  as  security,  debt  subsequently  paid,  effect, 

60. 
insurable  interest  in  life  of  debtor,  58,  66. 

none  in  life  of  his  wife,  66. 
insurable  interest  of  creditor,  48. 

of  judgment  creditor,  48. 

insurable  interest  of  owner  in  goods  concealed  from  creditor,  48. 
See  ASSIGNMENT  OF  POLICY;  INSURABLE  INTEREST. 

DEFENSES, 

condition  as  to  incumbrance,  estoppel  to  assert,  188,  note  35. 

condition  subsequent,  118. 

false  and  material  representations,  114. 

when  not,  114. 

fraud,  agreement  to  waive,  68. 
in  action  against  reinsurer,  9. 
incontestable  clause,  when  not  a  bar,  68. 
no  insurable  interest.    See  INSUBABLE  INTEREST. 
non-compliance  with  conditions,  agent  knowing  of  intent  to  vio- 
late, 188. 

oral  promissory  representation  made  in  bad  faith,  112. 
violation  of  statute  by  company  will  not  avoid  policy,  12. 
waiver  by  company,  when,  181. 

See  CONDITIONS;  ESTOPPEL;  FRAUD;  WAIVER. 


492  INDEX. 

[References  are  to  Sections.] 
DEFINITIONS, 

"accident,"  391. 

accident  insurance,  7. 

"apparent  or  ostensible  authority,"  158. 

"beneficiary,"  352. 

"broker,"  157. 

casualty  insurance,  7. 

"cease  to  be  operated,"  251. 

"civil  commotion,"  229. 

"concealment,"  80. 

"direct  loss  or  damage  by  fire,"  221. 

endowment  insurance,  7. 

"estoppel,"  175. 

fidelity  insurance,  7. 

fire  insurance,  7. 

"general  agent,"  154. 

guaranty  insurance,  7. 

insurable  interest,  42. 

in  lives,  57. 
insurance,  6. 
insurance  agent,  150. 
"insurrection,"  229. 
interest  policy,  30. 
"invasion,"  229. 
life  insurance,  7. 
marine  insurance,  7. 
open  policy,  30. 
"other  insurance,"  246. 
"proof  of  loss,"  303. 
representation,  101. 
"riot,"  229. 
"special  agent,"  154. 
time  policy,  30. 
"usurped  power,"  229. 
valued  policy,  30. 
voyage  policy,  30. 
wager  policy,  30. 
"waiver,"  175,  176. 
warranty,  102. 

See  CONSTRUCTION  OF  POLICY;  WORDS  AND  PHRASES. 

DELIVERY  OF  POLICY, 

after  accepting  note  is  a  payment  of  the  premium,  358. 
as  an  assignment,  364. 

when  not  necessary,  364. 

as  a  waiver  of  condition  as  to  incumbrance,  when,  188,  note  35. 
by  clerk  of  agent,  156. 
constructive,  31. 


INDEX.  493 

[.References  are  to  Sections.} 
DELIVERY  OF  POLICY— Continued, 
mailing  is,  358. 

none,  premium  unpaid,  effect,  31. 
sufficient  consideration  for  note,  130. 
to  broker,  157. 

DEMAND, 

for  arbitration,  when  necessary,  319. 
DESCRIPTION, 

ambiguous,  parol  evidence  to  explain,  213. 
goods  held  in  trust,  211. 

by  warehousemen,  213. 
in  general,  210. 
may  cover  shifting  stock,  212. 
mistake,  correction  by  agent,  158. 

mistake  of  agent  in  describing  property  or  interest,  213. 
mutual  mistake,  reformation,  213. 

insured  accepting  without  objection,  213. 
of  buildings,  217. 

of  house,  evidence  to  show  barn  included,  217. 
of  insured  in  policy,  206. 
of  location  renders  it  material,  219. 

usage  as  controlling  factor,  219. 
of  merchandise,  company  presumed  to  know  mercantile  meaning  of 

words  used,  216. 

of  merchandise,  what  included,  216. 
of  property  as  a  distillery,  not  a  representation  that  it  is  operated 

as  such,  251. 

of  risk,  knowledge  of  agent,  188. 
of  title,  what  sufficient,  257. 
when  warranties,  215. 
See  APPLICATION;  CONSTRUCTION  OF  POLICY;  MISTAKE;  WORDS  AND  PHRASES. 

DISCRIMINATION, 

in  rates,  statutes  against,  126. 

DISEASE, 

condition  as  to  in  accident  policies,  construction,  399. 
knowledge  of  agent,  164. 
statements  as  to,  in  application,  375. 

See  APPLICATION;  HEALTH;  LIFE  INSURANCE  POLICY. 

DIVIDENDS, 

notice  of,  138. 

payment  of  premiums  with,  129. 

DIVORCE, 

See  HUSBAND  AND  WIFE. 


494  INDEX. 

[.References  are  to  Sections.'] 
DOMESTIC  INSURANCE  COMPANIES, 

state  has  full  control  over,  12. 
DOUBLE  INSURANCE, 

See  OTHER  INSURANCE. 
DUES, 

consideration  for,  136. 

See  ASSESSMENTS. 
DWELLING  HOUSE, 

construction  of  condition  as  to  vacancy,  289. 

illustrations,  291. 
use  of  part  as  a  stable,  218. 
use  of  words  in  a  policy,  effect,  215. 

See  CONSTRUCTION  OF  POLICY;  DESCRIPTION. 

B 

EMPLOYERS'  LIABILITY  INSURANCE, 

effect  of  judgment  against  insured,  414. 

in  general,  410. 

injuries  while  engaged  in  designated  business,  411. 

notice  of  injury  or  claim,  415. 

violation  of  statute  by  assured,  412. 

when  liability  accrues,  413. 

ENDOWMENT  INSURANCE, 
defined,  7. 
when  mutual  benefit  society  can  not  contract  for,  13. 

ENGLAND, 

assignee  without  insurable  interest,  63. 
rule  as  to  concealment,  80. 

EQUITY, 

will  not  release  from  forfeiture,  when,  128. 
ESTOPPEL, 

by  act  of  agent,  187. 

writing  erroneous  answers,  parol  evidence,  189. 

misleading  ignorant  and  illiterate. insured,  188. 
by  knowledge  of  agent,  188. 

of  false  statements  in  application,  164. 
definition,  175. 

does  not  apply  where  contract  is  contrary  to  law,  188. 
insured  guilty  of  fraud,  no  recovery  of  premiums  on  void  policy,  135. 
none  where  applicant  and  agent  are  in  collusion,  190. 
of  company  to  assert  waiver,  185. 


INDEX.  495 

[References  are  to  Sections.] 
ESTOPPEL — Continued, 

stockholder  in  mutual  company  voting  increase  of  assessment,  136. 

to  assert  forfeiture  for  non-payment  of  premiums,  when,  128. 

to  assert  non-return  of  premium,  when,  299. 

to  deny  agency  of  solicitor  where  policy  written  upon  application, 
153. 

to  deny  identity  of  property,  213. 

to  deny  liability  where  property  is  removed,  when,  219. 

to  refuse  acceptance  of  overdue  premium,  131. 

to  require  proofs  of  loss,  306. 

to  set  up  defenses  not  specified,  181. 

waived  requirement  can  not  be  set  up  to  forfeit  policy.  143. 

See  ACCEPTANCE;  WAIVER. 
EVIDENCE, 

expert  opinion  as  to  materiality,  117. 

as  to  increased  danger  from  vacancy,  255. 

in  action  against  reinsurer,  9. 

laws  of  congress  as  to  stamped  instruments,  effect,  28. 

of  agency,  what  is  competent,  153. 

to  show  actual  statements  made  to  agent,  189. 

to  show  oral  contract,  23. 

to  show  persons  intended  to  be  insured,  213. 

to  show  policy  wrongfully  in  hands  of  insured,  31. 

to  show  trade  meaning  of  term,  216. 

to  show  waiver,  159. 

See  BURDEN  OF  PROOF;  PAROL  EVIDENCE;  PRESCRIPTIONS. 

EXAMINATION  OF  INSURED, 
condition  as  to,  p.  323. 
rights  of  parties,  313. 

EXCLUDED  RISKS, 

condition  against  prohibited  articles,  p.  278. 

construction  of  condition,  283,  284. 
death  in  violation  of  law  or  at  hands  of  justice,  373. 

suicide  not  within  provision,  when,  373. 
exceptions  and  limitations,  236. 
explosion,  232. 
fall  of  building,  234. 
generation  of  illuminating  gas,  264. 
in  life  insurance,  p.  411. 
invasion,  riot,  etc.,  229. 
kerosene  oil,  exception  in  favor  of,  285. 
lightning,  233. 

neglect  to  protect  property,  231. 
residence  and  occupation,  372. 


496  INDEX. 

/ 

[References  are  to  Sections.] 
EXCLUDED  RISKS— Continued, 
suicide,  sane  or  insane,  368. 

no  provision  against,  effect,  369. 
theft,  230. 

See  EXPLOSION;    EXPLOSIVES;    FIREWORKS;    INFLAMMABLE  ARTICLES;    IN- 
CREASE OF  RISK;   PROHIBITED  ARTICLES. 
EXECUTION, 

levy  of  not  a  change  in  interest,  275. 

See  ALIENATION;   INCUMBBANCES. 
EXECUTION  SALE, 

insurable  interest  of  purchaser  at,  48. 
EXECUTORS  AND  ADMINISTRATORS, 

insurable  interest,  48. 
EXHIBITION  OF  PROPERTY  AND  RECORDS, 

condition  as  to,  p.  323. 

failure  to  produce  records,  314. 

EXPLOSION, 

fire  resulting  from,  liability  of  insurer,  232. 

powder  in  another  house  struck  by  lightning,  insured  building  de- 
stroyed, 232. 

resulting  from  fire,  liability  of  insurer,  232. 

See  CAUSE  OF  Loss;  EXCLUDED  RISKS;   FIREWORKS;   INFLAMMABLE  ARTI- 
CLES; INCREASE  OF  RISK;  PROHIBITED  ARTICLES;   STANDARD  POLICY. 
EXPLOSIVES, 

"fireworks,"  part  of  stock  of  Yankee  notion  store,  216. 
use  of  prohibited,  283,  284. 
See  EXCLUDED  RISKS;  FIREWORKS;   INCREASE  OF  RISK;  PROHIBITED 

ARTICLES;   STANDARD  POLICY. 
EXPOSURE  TO  DANGER, 

voluntary  and  unnecessary,  liability  of  insurer,  398. 

See  ACCIDENT  INSURANCE. 
EXPRESS  AGENT, 

payment  of  premium  to,  129. 

See  AGENTS;  POWERS  OF  AGENTS. 

EXTERNAL  SIGNS  OF  INJURIES, 
what  are,  396. 

See  ACCIDENT  INSURANCE. 

F 
FALL  OF  BUILDING, 

liability  for  damages  caused  by,  234. 
See  ARBITRATION  AND  APPRAISEMENT;  MEASURE  OF  DAMAGES;  TOTAL  Loss. 


INDEX. 


497 


[.References  are  to  Sections.] 
FALSE  REPRESENTATIONS, 
See  APPLICATION;  MISREPRESENTATIONS ;  MISTAKE;  REPRESENTATIONS  AKD 

WARRANTIES;  WARRANTIES. 
FALSE  SWEARING, 

See  FRAUD. 
FATHER, 

daughter  insuring  life  of,  recovery  of  premiums,  135. 

son  has  no  insurable  interest  in  life  of  arising  from  relationship,  65. 
FEDERAL  COURTS, 

assignee  without  insurable  interest,  62. 
FIDELITY  INSURANCE, 

defined,  7. 
.  in  general,  416. 

knowledge  of  insured,  constructive  notice,  418. 

notice  to  insurer  of  default,  416. 

proof  of  default,  417. 

supervision  of  employe,  103,  419. 

FIRE, 

as  cause  of  loss,  221,  222. 

breaking  out  after  fall  of  building,  liability,  234. 

resulting  from  explosion,  liability  of  insurer,  232. 

See  CAUSE  OF  Loss. 
FIRE  INSURANCE, 

defined,  7. 

non-disclosure  of  facts  not  asked  about,  84. 

origin,  and  growth,  5. 

right  of  subrogation,  21. 

See  APPLICATION ;  CONDITIONS;  STANDARD  POLICY. 

FIREWORKS, 

in  Yankee  notion  store,  216. 

knowledge  of  agent  of  intention  to  keep,  188,  note  35. 

acquired  outside  line  of  duty,  165. 
storing  of  increases  risk,  253. 
See  EXCLUDED  RISKS;  EXPLOSIVES;  INFLAMMABLE  ARTICLES;  INCREASE  or 

RISK;  PROHIBITED  ARTICLES. 
FIXTURES, 

covered  by  policy  on  building,  217. 
store  fixtures,  236. 

See  CONSTRUCTION  OF  POLICY  ;  DESCRIPTION. 

FLOOD, 

liability  for  damages  caused  by,  233,  note  229. 
See  CAUSE  OF  Loss. 

32 — ELLIOTT  INS. 


498  INDEX. 

[References  are  to  Sections.] 
FORECLOSURE, 

as  avoiding  policy,  condition,  263. 

waiver  by  local  agent,  160a,  note  58. 

See  ALIENATION. 
FOREIGN  COMPANIES, 

contracts  with  when  not  authorized  to  do  business  in  a  state,  12, 

note  39. 

exclusive  right  of  states  to  control,  12. 
restrictions  upon,  151. 
unauthorized,  license  to  represent,  151. 
unlicensed,  liability  of  agent,  151. 

FORFEITURE, 

affirmative  action  to  deny  waiver,  205. 
for  alienation  of  interest,  46. 
for  breach  of  condition,  205. 

waiver  by  agent,  158,  note  50. 
for  cessation  of  operations,  251. 
for  failure  to  furnish  proofs  of  loss,  when,  307. 
for  non-payment  of  assessments,  138. 

application  of  dividends,  138. 
for  non-payment  of  note,  130. 

application  of  dividends  to  prevent,  129,  note  37. 
for  non-payment  of  premiums,  waiver  of  by-laws,  128. 

New  York  law,  134,  note  65. 

for  non-payment  of  premiums  at  certain  time,  estoppel  to  assert,  128. 
for  procuring  other  insurance,  245,  et  seq. 

waiver,  249. 

for  removal  of  property,  waiver,  219. 

knowledge  of  agent,  company  estopped  to  assert,  188,  note  32. 
none  until  notice  given  that  premium  is  due,  when,  128. 
none  where  condition  waived  by  company,  143. 
not  prevented  by  part  payment,  128. 
of  benefits,  unpaid  assessments  not  a  debt,  127,  137. 
parol  evidence  to  show  waiver,  189. 
premiums  not  paid  within  specified  time,  128. 
right  to,  implied  waiver,  128. 

statute  repealed,  conditions  in  contract  enforced,  134. 
waiver,  effect  on  policy,  176,  note  2. 
waiver  by  adjuster,  155,  181,  note  16.  * 

by  failure  to  mention  among  other  defenses,  181,  note  15. 

by  issuing  policy  with  knowledge  of  facts,  188,  note  35. 

by  local  agent,  160a,  note  58. 

by  requiring  proofs  of  loss,  181. 
See  CONSTRUCTION  OF  CONDITION;  ESTOPPEL;  WAIVER. 

FRATERNAL  SOCIETY, 

waiver  of  by-laws  as  to  payment  of  premiums,  128. 
See  BENEFIT  SOCIETIES. 


INDEX.  499 

[References  are  to  Section*.] 
FRAUD, 

applicant  and  agent  in  collusion,  190. 

concealment  of  other  insurance  does  not  tend  to  show,  245,  note  8. 

constructive,  misrepresentation  as,  85. 

expectation  or  belief,  untrue  statement  of,  109. 

innocent  misstatement  or  a  mistake  in  opinion  is  not,  228. 

of  agent,  recovery  of  premiums,  67,  135. 

repudiation  by  company,  161. 

of  insured,  estoppel  to  recover  premiums  on  void  policy,  135. 
oral  promissory  representation  made  in  bad  faith,  112. 
waiver  by  company,  68. 
See  APPLICATION;  CONCEALMENT;  DEFENSES;  MISREPRESENTATION. 

FRAUDULENT  CONVEYANCE, 

to  insured,  has  unconditional  and  sole  ownership,  259. 
See  ALIENATION;    CONVEYANCE  OF  REAL  ESTATE;    INSUBABLE  INTEREST; 
TITLE  AND  OWNERSHIP. 


G       . 

GENERAL  AGENTS, 

accepting  note  of  third  person  in  payment  of  premium,  130. 
application  prepared  by,  161,  162. 
powers  and  limitations,  158,  163. 
power  to  waive  conditions,  182,  185,  301. 
waiver  of  prepayment  of  premium  by,  129. 

See  AGENTS  OF  COMPANIES;  POWERS  OF  AGENTS. 

GRANDFATHER  AND  GRANDSON, 
insurable  interest  in  lives,  66. 

GRANTOR  AND  GRANTEE, 

under  executory  contract  of  sale,  insurance  on  different  interests, 

246. 
GUARANTY  INSURANCE, 

defined,  7. 

GUNPOWDER, 

in  another  house  struck  by  lightning,  insured  house  destroyed,  2: 
See  CAUSE  OF  Loss;  EXCLUDED  RISKS;  EXPLOSION;  EXPLOSIVES;  INCREASE 
OF  RISK;  PROHIBITED  ARTICLES. 


H 

HABITS, 

statements  as  to,  in  application,  374. 

See  APPLICATION;  LIFE  INSURANCE. 


500  INDEX.  T 

t. 

[References  are  to  Sections.] 
HEALTH, 

certificate  of,  as  condition  of  reinstatement,  142. 
good  faith  answer  as  to  existence  of  disease,  108. 
statements  as  to,  375. 

See  APPLICATION;   DISEASE;   LIFE  INSURANCE. 
HEIRS, 

who  are,  352. 

HISTORY  OF  INSURANCE, 
sources,  1. 

insurance  in  Roman  law,  2. 
development  on  the  continent,  3. 
growth  in  England,  4. 

HORSES, 

policy  covering  during  ordinary  use,  219. 

See  LOCATION;  REMOVAL  OF  PBOPERTY.. 

HUSBAND  AND  WIFE, 

continuity  of  insurable  interest,  wife  obtaining  divorce,  effect,  60. 
husband  is  sole  and  unconditional  owner  of  household   furniture 

owned  by  wife  before  marriage,  259. 
insurable  interest  of  husband  in  property,  48. 

in  life  of  wife,  66. 

insured  conveying  property  to  wife,  272. 
policy  payable  to  wife,  free  from  claims  of  creditors,  66,  354. 
property  of  insured  sold  without  her  consent,  270. 
relation  imports  insurable  interest,  65. 

rights  of  wife  in  proceeds  of  benefit  certificate  after  separation,  352. 

wife  insuring  husband's  life,  recovery  of  premiums  by  husband,  135. 

woman  living  with  man  as  his  wife,  insurable  interest  in  his  life,  66. 

See   BENEFICIARIES;    INSTJBABLE   INTEREST;    PAYEE   OF   FIRE    INSURANCE; 

PAYEE  OF  LIFE  INSURANCE;  TITLE  AND  OWNERSHIP. 

I 
ILLUMINATING  GAS, 

condition  against  generation  of,  264. 

See  EXCLUDED  RISKS;  PROHIBITED  ARTICLES. 

ILLUSTRATIVE  CASES, 
accident,  391,  392. 

affirmative  and  promissory  representations,  110. 
affirmative  and  promissory  warranties,  103. 
cessation  of  operations,  251. 
continuing  warranties,  110. 
construction  of  condition  against  vacancy,  291. 
construction  of  condition  as  to  renewal  of  policy,  293,  294. 
evidence  of  agency,  153. 


INDEX.  501 

[References  are  to  Sections.] 
ILLUSTRATIVE  CASES— Continued, 
fall  of  building,  234. 
increase  of  risk,  253. 

injuries  while  engaged  in  designated  business,  411. 
innocent  misstatements  and  mistakes  in  expressing  opinions,  policy 

not  avoided  for  fraud,  228. 
insurable  interest  in  lives,  66. 

in  property,  48. 
measure  of  damages,  337. 
payment  of  premium,  358. 

removal  of  property  from  place  insured  at,  220. 
sole  and  unconditional  ownership,  259. 

breach  of  condition  as  to,  260. 
soliciting  agent,  limitations  of  authority,  155. 
use  of  premises,  prohibited  articles,  283,  284. 
voluntary  exposure  to  unnecessary  danger,  398. 
waiver  of  right  to  arbitrate,  323. 

INCONTESTABLE  CLAUSE, 

condition  as  to,  p.  409. 

construction,  366. 

when  not  available  to  insured,  68. 

INCREASE  OF  RISK, 

condition  against,  253. 

duty  of  insured  to  inform  company,  253,  254. 

knowledge  of  agent,  254. 
effect,  255. 

placing  and  operating  engine  fifty  feet  away  is  not,  256. 
understatement  of  age  is,  when,  360. 
what  is  not,  illustrations,  253. 

See  EXCLUDED  RISKS;  PROHIBITED  ARTICLES. 

INCUMBRANCES, 

chattel  mortgages,  condition  against,  262. 

defeasible  conveyances  are,  269. 

duty  to  disclose,  258. 

effect  on  quality  of  title,  258. 

knowledge  and  consent  of  company,  258,  note  114. 

knowledge  of  agent,  188,  note  32. 

waiver,  188,  note  35. 
lease,  when  is  not,  258. 
lien  for  purchase-money,  when  is  not,  258. 
misdescription  of  in  standard  policy,  effect,  225. 
misrepresentations  as  to,  258,  note  114. 

mortgage,  not  a  change  in  interest,  title,  or  possession,  when,  268. 
new  mortgage  to  discharge  old,  258,  note  114. 

See   ALIENATION;    CONSTRUCTION   OF   CONDITION;    MORTGAGOR   AND   Mow- 
GAGEE;  TITLE  AND  OWNERSHIP. 


502  INDEX. 

[References  are  to  Sections.] 

INFANT, 

insurance  of,  11. 

power  to  contract  for  insurance,  351,  note  1. 

INFLAMMABLE  ARTICLES, 

articles  prohibited  by  standard  policy,  283,  284. 

exception  in  favor  of  kerosene  oil,  285. 

paints  and  varnishes  used  in  finishing  furniture,  when  covered,  216. 
See  EXCLUDED  RISKS;  PROHIBITED  ARTICLES;  STANDARD  POLICY. 

INSOLVENCY, 

insurable  interest  of  debtor  in  goods  held  by  assignee,  48. 
INSURABLE  INTEREST  IN  LIVES, 

assignee  of  policy,  insurable  interest,  60. 
assignee  without,  policy  is  a  chose  in  action,  63. 
recovery  of  premiums  paid,  67. 

rule  in  Alabama,  Kansas,  Kentucky,  North  Carolina,  Pennsyl- 
vania, Tennessee,  Texas,  and  federal  courts,  62. 
rule  in  California,  Colorado,  Georgia,  Illinois,  Indiana,  Mary- 
land, Massachusetts,  Mississippi,  New  York,  Ohio,  Rhode 
Island,  South  Carolina,  Vermont,  Wisconsin,  England,  and 
Canada,  63. 

based  upon  relationship,  64. 
beneficiary  need  not  have  where  insured  makes  contract  and  pays 

premiums,  61. 
common  law  rule,  55. 
continuity,  must  exist  when,  60. 
creditor's  insurable  interest,  58. 

daughter  insuring  life  of  father,  mistake  of  law,  recovery  of  pre- 
miums, 135. 
defined,  57. 
description,  70. 

English  statute,  not  in  force  in  this  country,  56. 
Illustrative  cases,  66. 
modern  rule,  57. 

mother  none  in  life  of  son,  63,  note  47. 
North  Carolina  rule,  64. 
pleading  and  proof,  69. 

premium  paid  by  beneficiary,  no  insurable  interest,  effect,  59. 
want  of  as  a  defense  under  incontestable  clause,  68,  366. 
wife  in  life  of  husband,  65. 

See  ASSIGNEE;    ASSIGNMENT  OF  POLICY;    BENEFICIARIES;    HUSBAND   AND 
WIFE;  PAYEE  OF  LIFE  INSURANCE. 

INSURABLE  INTEREST  IN  PROPERTY, 
conditional,  47. 
contingent,  47. 
continuity  of  interest,  alienation,  46. 


INDEX.  503 

[.References  are  to  Sections.] 

INSURABLB  INTEREST  IN  PROPERTY— Continued, 
defined,  42. 
different  interests,  44. 
insurance  on,  246. 
equitable  title,  47. 
illegal  or  immoral,  47. 
illustrative  cases,  48. 
legal  title,  47. 
nature,  41,  43,  47. 

nature  of  undisclosed,  showing  at  time  of  loss,  227. 
officer  in  property  held  at  expense  of  parties,  48,  note  70. 
quality  of  title,  duty  to  disclose,  when,  257. 
railway  company  in  property  along  right  of  way,  47. 
time  of  interest,  45. 

value  or  condition  of  need  not  he  stated,  227. 

See  ALIENATION;  ASSIGNEE;  ASSIGNMENT  OF  POLICY;  HUSBAND  AND  WIFE; 
PAYEE  OF  FIEE  INSURANCE;  TITLE  AND  OWNERSHIP. 

INSURANCE, 

against  embezzlement,  see  FIDELITY  INSURANCE. 
against  loss  of  rents,  423,  note  51. 
against  theft,  423,  note  51. 
definition,  6. 

history  of,  see  HISTORY  OF  INSURANCE. 
kinds,  7. 
of  crops,  45. 

state  control,  individuals  engaging  in  business  of,  151. 
See  CONTRACT  OF  INSURANCE;  RISK;  SUBJECT-MATTEI  OF  INSURANCE. 

INSURANCE  AGENTS, 

See  AGENTS   OF   COMPANIES;    BROKERS;    CLERKS   OF   AGENTS;    GENERAL 
AGENTS;  POWERS  OF  AGENTS. 

INSURANCE  COMPANIES, 
control  by  state,  151. 
estopped  to  deny  agency,  when,  153. 

INTEMPERANCE, 

knowledge  of  agent,  164. 

See  APPLICATION;  HABITS;  LIFE  INSURANCE  POLICY. 

INTEREST  POLICY, 
defined,  30. 

INTOXICATING  LIQUORS, 

illegally  kept  for  sale,  insurance  valid,  14. 
injuries  received  while  under  influence  of,  402. 
insuring  against  fine  or  forfeiture  for  selling,  14. 
statements  as  to  use  of,  374. 
using  building  for  illegal  sale  of,  effect,  255. 

See  APPLICATION;  HABITS;  LIFE  INSURANCE  POLICY. 


504  INDEX. 

[References  are  to  Sections.'] 
IRON  SAFE  CLAUSE, 
construction,  315. 

waiver  by  general  agent,  301. 


JUDGMENT, 

alienation  by,  276. 


KEEPING  BOOKS, 

agreement  as  to,  314. 

in  fireproof  safe,  315. 

waiver  by  general  agent,  301. 
See  RECORDS. 
KEROSENE, 

See  INFLAMMABLE  ARTICLES. 

L 

LAPSE, 

for  non-payment  of  premium,  New  York  law,  134,  note  65. 
on  non-payment  of  premium,  premium  not  a  debt,  127. 
of  mutual  policy,  how  revived,  142,  note  95. 

LEGAL  REPRESENTATIVES, 

who  are,  construction  of  term,  352. 
LESSOR  AND  LESSEE, 

insurable  interest,  48. 

lease  not  an  incumbrance,  when,  258. 

tenant  agreeing  to  insure,  48,  note  68. 

LICENSE, 

to  act  as  insurance  agent,  151. 
LIFE  INSURANCE, 

defined,  7. 

not  a  contract  of  indemnity,  19,  41. 

origin  and  growth,  5. 

LIFE  INSURANCE  POLICY, 

application,  provisions  in,  367a. 
application,  statements  in, 

as  to  age,  361. 

as  to  bodily  injuries,  376. 

as  to  family  relationship,  378. 

as  to  habits,  374. 

as  to  health,  375. 


INDEX.  505 

[References  are  to  Sections.  ] 
LIFE  INSURANCE  POLICY— Continued, 

as  to  medical  attendance,  377. 

as  to  other  insurance,  379. 

as  to  rejection  of  former  application,  380. 
assignment  of,  p.  403. 

assignability,  362. 

by  assignee,  365. 

manner  of  making,  364. 

notice  to  company,  363. 
beneficiary,  manner  of  changing,  356. 

manner  of  designation,  352. 

reservation  of  right  to  change,  355. 

rights  of,  354. 
to  fund,  352. 

transmission  of  interest,  353. 
excepted  risks, 

death  in  violation  of  law  or  at  hands  of  justice,  373. 

residence  and  occupation,  372. 

suicide,  sane  or  insane,  368. 

no  provision  as  to  effect  of,  369. 
construction,  370. 
presumption,  burden  of  proof,  371. 
incontestable  clause,  366. 

when  not  available  to  insured,  68. 
in  general,  350. 

not  a  negotiable  instrument,  365. 
parties,  351. 
payment  of  premium  a  condition  precedent,  p.  395. 

illustrations,  358. 

time  when  due,  construction  by  agent,  estoppel,  359. 
powers  of  agent,  360. 
right  to  proceeds,  bankruptcy,  357. 
special,  privileges,  367. 
See  APPLICATION;  CONDITIONS;  CONSTRUCTION  OF  CONDITIONS;  POLICIES. 

LIFE  TENANT, 

insurable  interest,  48. 

LIGHTNING, 

horses  killed  by  while  away  from  home,  219,  note  134. 
liability  for  damage  caused  by,  233. 

LIMITATIONS, 

as  to  time  of  bringing  suit  on  policy,  validity,  329. 
begin  to  run,  when,  330. 

LLOYDS  POLICY, 
origin,  4. 


506  INDEX. 

[.References  are  to  Sections.} 
LOAN, 

insurance  taken  to  procure,  recovery  of  premium,  when,  126,  note  7. 
LOCATION  OF  PROPERTY, 

change  of,  effect,  218,  219. 

condition  authorizing  change  of,  p.  293. 

description,  when  material,  219. 

usage  as  controlling  factor,  219. 

See  REMOVAL  OF  PROPERTY. 
LOSS, 

after  death,  who  must  make  proof  of  loss,  11. 
certificate  as  to  amount  of,  309. 
during  suspension  from  membership,  141. 
notice  of  to  local  agent,  165. 
payment  of  premium  after,  131. 

premium  sent  after,  burden  of  proving  acceptance,  131,  note  50. 
refusal  to  pay  for  specified  reason,  other  defenses  estopped,  181. 
refusal  to  pay  without  specifying  reason,  defenses,  181. 
See  CAUSE  OF  Loss;  NOTICE  OF  Loss;  PROOF  OF  Loss;  TOTAL  Loss. 

LOTTERY  TICKETS, 

insurance  on  against  public  policy,  55,  note  5. 

M 

MACHINERY, 

not  included  in  term  "manufacturing  establishment,"  251. 
MAILING, 

check  for  premium,  129,  358. 

notice  and  proof  of  loss,  308. 

notice  of  other  insurance,  receipt  denied,  249. 

policy  to  insured  is  a  delivery,  358. 

registered  letter,  completion  of  notice  by,  134,  note  66. 

MANUFACTURING  ESTABLISHMENT, 

"cease  to  be  operated,"  defined,  251. 

condition  as  to  operating,  251. 

condition  against  vacancy,  construction,  290. 

machinery  is  not,  251. 

See  NIGHT- WORK. 
MARINE  INSURANCE, 

by  government,  2,  note  10. 

concealment,  rule  as  to,  80. 

defined,  7. 

subrogation,  21. 

MARRIAGE, 

contract  in  restraint  of,  8. 

See  CONTRACT  OF  MARRIAGE. 


INDEX.  507 

t0 


MATERIAL  FACTS, 

See  APPLICATION;  CONCEALMENT;  FBAUD;  MISEEPBESENTATION  ;  QUKSTIOK 

FOB  JURY;  QUESTION  OF  LAW. 
MEASURE  OF  DAMAGES, 
condition  as  to,  p.  362. 
for  injury  received  in  more  hazardous  occupation,  395. 

increase  of  hazard  question  for  jury,  395. 
governed  by  extent  of  disability,  403. 
illustrations,  337. 
in  credit  insurance,  421. 
under  valued  policy,  209,  332,  333. 
value  at  date  of  loss,  337. 

See  TOTAL  Loss;  VALUE. 
MECHANIC'S  LIEN, 

insurable  interest,  48. 
MEMBERSHIP, 

reinstatement,  142. 
MERGER, 

of  oral  representations  in  written  application,  108. 

MISAPPROPRIATED  FUNDS, 

payment  of  premium  with,  129. 

MISREPRESENTATIONS, 

as  to  incumbrances,  effect,  258,  note  114. 
by  agent  of  company,  estoppel,  187. 

rescission  by  insured,  188. 
by  agent  of  insured,  92,  113. 

false  representations  in  proof  of  loss,  knowledge  of  company,  228. 
material,  policy  avoided,  when,  114. 

burden  of  proof  as  to  materiality,  118. 
See  APPLICATION;    CONCEALMENT;    FRAUD;    INCUMBBANCES;    REPRESENTA- 

TIONS AND  WARRANTIES;  WARRANTIES. 
MISTAKE, 

concealment  through,  91. 

in  description  of  property,  correction  by  agent,  158. 

reformation,  213. 
in  proof  of  loss,  228. 
in  warranty,  good-faith  answer,  108a. 
naming  wrong  person  as  insured,  reformation,  206. 
of  agent  in  describing  subject-matter,  187. 

in  writing  answers  in  application,  164,  187. 

of  law,  daughter  insuring  father's  life,  recovery  of  premiums,  135. 
See  APPLICATION;  DESCRIPTION. 


508  INDEX. 

[References  are  to  Sections.] 
MORTGAGES, 

breach  of  condition  as  to,  205,  notes  15,  16. 
new  one  to  discharge  old,  effect,  258,  note  114. 

See  ALIENATION;  CONSTRUCTION  OF  CONDITIONS;  INCUMBRANCES;  STANDABD 

POLICY. 

MORTGAGOR  AND  MORTGAGEE, 

conditions  affecting  mortgagee,  p.  378. 

special  provisions,  341. 
different  interests,  insurance  of,  246. 
insurable  interest,  48. 

mortgagee  neglecting  to  inform  company  of  increased  risk,  254. 
mortgagee  not  a  party  to  an  arbitration,  when,  326. 
mortgagee,  when  liable  for  premium,  127,  note  10. 
mortgagor  in  possession,  insurable  interest,  48,  note  47. 
policy  in  name  of  mortgagor  for  benefit  of  mortgagee,  mortgagor 

obtaining  other  insurance,  246. 
premium  unpaid,  when  mortgagee  can  not  recover,  127,  note  10. 

MOTHER, 

as  beneficiary,  no  insurable  interest,  63,  note  47. 
MOTHER-IN-LAW, 

insurable  interest  in  life  of  son-in-law,  66. 
MURDER, 

liability  for  under  accident  policy,  400. 
MUTUAL  BENEFIT   SOCIETIES, 

See  BENEFIT  SOCIETIES. 
MUTUAL  COMPANIES, 

arbitration,  rules  governing,  317. 
assessments  in,  136. 

accepted  after  death,  141. 

dividends  applied  on,  138. 

ignorance  of  terms  of  contract,  no  recovery  of,  135. 

liability  for,  137. 

liability  limited,  133,  note  61. 
nature,  payment,  125. 
non-payment  of,  effect,  138. 
paid  in  anticipation,  none  made,  138,  note  83. 
stockholder  voting  to  increase,  136. 
beneficiaries,  manner  of  changing,  356. 
death  or  loss  during  suspension  from  membership,  141. 
insolvency,  assessments  by  receiver,  140. 
organization  and  status,  136. 

payment  of  assessments,  waiver  of  requirements,  143. 
payment  of  premiums,  133. 
premium  notes  payable  absolutely,  negotiable,  133. 


INDEX.  509 

{.References  are  to  Sections.] 
MUTUAL  COMPANIES— Continued, 
regulation  of,  13. 

regulations  enter  into  standard  policy,  p.  381. 
reinstatement  of  members,  142. 
withdrawal  of  member,  liability,  139. 

See  BENEFICIARIES;  BENEFIT  SOCIETIES. 

N 

NEGLIGENCE, 

concealment  through,  91. 

effect  under  accident  policy,  397. 

of  insured,  right  of  recovery,  22. 

in  protecting  property  after  fire,  liability  of  insurer,  231. 
of  third  person,  rights  of  parties,  22. 

NIECE, 

insurable  interest  in  life  of  uncle,  66. 
NIGHT-WORK, 

running  over  hours,  construction  of  condition,  252. 
knowledge  of  agent,  waiver,  252. 

See  MANUFACTURING  ESTABLISHMENT. 

NON-DISCLOSURE  OF  MATERIAL  FACTS, 

See   CONCEALMENT;    FRAUD;    MISREPRESENTATION;    QUESTION   FOR   JURY; 

QUESTION  OF  LAW;   REPRESENTATIONS  AND  WARRANTIES. 
NOTICE, 

of  accident  or  claim,  duty  to  give,  415. 

of  assessment,  by  mail,  date  of,  134,  note  66. 

of  authority  of  agent,  186. 

constructive  notice,  161. 
of  condition  of  title,  to  clerk  of  agent,  156. 
of  default,  duty  to  give,  416. 
of  dividends,  138. 

of  limitations  contained  in  application,  160,  161. 
of  other  insurance,  policy  requiring,  245. 
mailing,  receipt  denied,  249. 
to  clerk  of  agent,  156. 
to  agent,  when  notice  to  company,  164. 
to  agent's  clerks,  156. 

NOTICE  OF  CANCELLATION, 

must  be  given  to  the  insured,  296. 

time  of,  297. 
to  broker,  when  not  notice  to  insured,  157. 

broker  employed  by  insured,  298. 
what  is  sufficient,  300. 

See  CANCELLATION;  STANDARD  POLICT. 


510  INDEX. 

[References  are  to  Sections.] 
NOTICE  OF  LOSS, 

condition  as  to,  p.  309. 

compliance  with  condition,  what  is,  303,  308. 

failure  to  give,  not  waived  by  retaining  proofs  of  loss,  181,  note  16. 
"immediate"  notice,  what  is,  304. 
to  local  agent,  165. 
to  whom  must  be  given,  312. 

See  PBOOFS  OF  Loss. 

NOTICE  OF  MATURITY  OF  PREMIUMS, 
custom  or  usage,  134. 
duty  to  give,  128. 
in  New  York,  129,  note  32. 
statutory  requirement,  134. 

burden  to  show  compliance  with,  134. 

See  PREMIUMS;  PAYMENT  OF  PREMIUMS. 

0 
OCCUPANCY, 

breach  of  condition  as  to,  205,  notes  15,  16. 
description  of,  when  a  warranty,  215. 
See  CONSTRUCTION  OF  CONDITION;  VACANCY;  USE  OF  PREMISES. 

OCCUPATION  OF  INSURED, 

construction  of  condition  in  accident  insurance,  395. 
statement  as  to,  in  application,  372. 

OFFICERS, 

conditions  restricting  power  of,  163. 

insurable  interest  in  property  held  under  attachment  or  levy,  48. 

OPEN  POLICY, 
denned,  30. 
effect  of  overvaluation,  228. 

ORDER, 

acceptance  in  payment  of  premiums,  129. 
ORDINANCE, 

refusing  permission  to  repair  as  affecting  total  loss,  235. 
OTHER  INSURANCE, 

benefit  certificates,  13,  379. 
condition  against,  p.  219. 

breach  of,  effect,  205,  notes  15  and  16,  245,  248. 

policy  on  different  interest  is  not,  246. 
construction  of,  245. 
waiver  of  by  agent,  183. 
concealment  of  fact  of,  245,  note  3. 


INDEX. 

[References  are  to  Sections.} 
OTHER  INSURANCE— Continued, 
consent  of  company,  249. 
definition,  246. 

divisibility  of  contract,  effect,  250. 
double  insurance,  what  is,  250. 

expiration  of,  original  policy  not  reinstated,  245,  note  2. 
knowledge  of  agent,  164,  188,  note  32. 

of  secretary,  estoppel,  188,  note  35. 
notice  to  clerk  of  agent,  156. 
procured  by  stranger,  246. 
statements  as  to  in  application,  379. 

interpretation  of  agent,  359,  note  75. 
"valid  or  invalid,"  construction,  247. 

OVEREXERTION, 

when  covered  by  accident  insurance,  391  and  note  5. 
OVERVALUATION, 

as  breach  of  warranty,  228. 

as  evidence  of  fraud,  228. 

effect  in  open  policy,  228. 
in  valued  policy,  333. 
OWNER, 

agent  in  possession  insuring  for,  48,  note  39. 
applicant  stating  that  he  is,  construction,  227. 
insurable  interest  in  building  in  course  of  erection,  48.  note  41. 
See  TITLE  AND  OWNERSHIP. 


P 

PAID-UP  POLICY, 

right  to  without  paying  outstanding  premium  note,  132,  note  58. 
when  issued,  and  conditions  of,  132. 

PARENT    AND    CHILD, 

insurable  interest  in  life  of  minor  son,  66. 
in  life  of  parent,  66. 

of  son  in  life  of  father,  65. 
relation  assumed,  insurable  interest  of  girl,  66. 

PAROL  EVIDENCE, 

to  explain  ambiguous  description,  213. 

to  show  actual  time  policy  takes  effect,  208. 

to  show  barn  included  in  description  of  house,  217. 

to  show  truthful  answers,  189. 

to  show  waiver  of  conditions,  159. 

to  show  waiver  of  forfeiture,  189. 

See  BURDEN  OF  PROOF;  EVIDENCE;  PRESUMPTIONS. 


511 


512  INDEX. 

[References  are  to  Sections.] 
PARTICEPS   CRIMINIS, 

applicant  in  collusion  with  agent,  190. 
PARTIES, 

description  in  policy,  206. 

relations  in  contract  of  reinsurance,  9. 

to  arbitration,  mortgagee  is  not,  when,  326. 

to  contract  of  insurance,  10. 

to  life  insurance  contract,  351. 

who  may  be  insured,  11. 

who  may  contract  to  insure,  12. 
See  CONTBACT  OF  INSURANCE;  LIFE  INSURANCE  POLICY;  STANDARD  POLICY. 

PARTITION, 

as  change  in  interest,  277. 

See  ALIENATION. 
PARTNERSHIP, 

insurable  interest  in  each  other's  lives,  66. 

in  firm  property,  48. 
policy  in  firm  name,  dissolution,  259. 

sale  by  one  partner  to  another  not  an  increase  of  risk,  253. 
transfers  by  and  between  partners,  273. 
transfers  between  partners  jointly  insured,  280. 

PAWNBROKERS, 

insurable  interest,  47. 

PAYEE  OF  FIRE   INSURANCE, 

mortgagee  as  assignee  or  beneficiary  of  policy,  341. 

policy  payable  to  appointee  as  interest  may  appear,  206. 
See  ASSIGNEE;  ASSIGNMENT  OF  POLICY;  BENEFICIARIES;  INSUBABLE  INTEREST. 

PAYEE   OF   LIFE   INSURANCE, 

beneficiaries,  manner  of  designation,  construction,  352. 

insurable  interest  unnecessary  where  insured  makes  contract  and 

pays  premiums,  61. 

no  insurable  interest,  paying  premiums,  recovery  when,  61. 
See  ASSIGNMENT  OF  POLICY;  BENEFICIARIES;   INSUBABLE  INTEREST. 

PAYMENT  OF  LOSS, 

condition  as  to  time  of,  p.  357. 
construction,  328. 

PAYMENT   OF   PREMIUMS, 

acceptance  of  promissory  note,  130. 
a  condition  precedent,  effect,  128. 

illustrations,  358. 
after  loss  or  death,  131. 
agent  collecting  and  retaining,  184. 


INDEX.  5X3 

[References  are  to  Sections.] 
PAYMENT  OF  PREMIUMS— Continued, 
agent  waiving  prompt  payment,  159. 
by  beneficiary  or  one  not  a  beneficiary,  rights,  352. 

no  insurable  interest,  effect,  59. 
condition  as  to,  p.  395. 
days  of  grace,  131. 
in  casb,  waiver  by  agent,  184. 

waiver  by  soliciting  agent,  effect,  186. 
in  gross,  contract  not  severable,  when,  225,  note  188. 

Missouri  rule,  225. 

New  York  rule,  225,  note  189. 
in  mutual  companies,  133. 
notice  of  time  when  due,  128. 
paid-up  policies,  132. 

part  payment  will  not  prevent  forfeiture,  128. 
required  within  specified  time,  forfeiture  for  non-payment,  128. 
statute  repealed,  conditions  in  contract  enforced,  134. 
suspension  of  contract  during  non-payment,  128. 
time,  manner,  ahd  place,  129. 

extension  of  time,  128. 

must  be  made  before  loss,  128. 

time  when  due,  construction  by  agent,  estoppel,  359. 
to  agents,  358. 
to  clerk  of  agent,  156. 
waiver  by  clerk  of  agent,  156. 
waiver  of  by-laws  as  to,  128. 
See  NOTICE  OF  MATURITY  OF  PREMIUMS;   PREMIUMS;   PREMIUM  NOTES; 

PROMISSORY  NOTES. 
PENALTY, 

for  issuing  other  than  prescribed  form  of  policy,  203. 

PLATE  GLASS, 

not  excepted  from  contract  of  insurance,  237. 

PLEADING, 

condition  subsequent  need  not  be  pleaded,  118. 

value  at  date  of  loss  need  not  be  stated  in  complaint  on  policy,  337. 

PLEADING  AND   PROOF, 

insurable  interest,  69. 

insurer  must  allege  and  prove  falsity  of  warranty  in  Minnesota.  118. 

insurer  must  allege  warranty  and  prove  materiality,  118. 

POLICIES, 

acceptance  does  not  imply  assent  to  new  conditions,  when,  129. 
cancellation,  conditions  as  to,  p.  298. 
classified  and  defined,  30. 
33 — ELLIOTT  INS. 


514  INDEX. 

[References  are  to  Sections.'] 
POLICIES — Continued, 

construction,  rule  of,  204. 

as  to  standard  policy,  204. 
countersigned  by  agent,  32. 
delivery,  completion  of  contract,  31. 
delivery  to  broker,  157. 
description  of  insured  in,  206. 
facts  to  defeat  known  to  company,  187. 
form  controlled  by  law,  200. 
form  disregarded,  when,  59. 
invalid,  knowledge  of  agent,  188. 
limitations  as  to  prepayment  of  premium,  186. 
Lloyds  policy,  4. 

misdescription  in  corrected  by  agent,  158. 
reformation,  295. 
renewal,  condition  as  to,  p.  293. 

construction  of  condition,  293,  294. 
required  by  statute  to  be  signed  by  corporate  officers,  oral  contract, 

how  affected,  27. 

restrictions  in  on  powers  of  agents,  159. 
revenue  stamp,  failure  to  affix,  effect,  28. 
statutory  provisions  in,  can  not  be  waived,  180. 
void  at  initio,  recovery  of  premiums,  135. 
waiver  of  forfeiture,  effect,  176,  note  2. 

See  ASSIGNMENT  OF  POLICY;  CANCELLATION;  CONSTRUCTION  OF  POLICY; 
DELIVERY  OF  POLICY;  LIFE  INSURANCE  POLICY;  REFORMATION;  STANDARD 
POLICY. 

POWERS   OF  AGENTS, 
adjuster,  155. 

"apparent  or  ostensible  authority,"  158. 
authorization  in  writing,  223. 
authority  to  cancel  policy,  298. 
collecting  agent,  155. 
conditions  as  to,  p.  401. 

construction  of,  160a. 
correcting  misdescription  in  policy,  158. 
delegating  authority  to  clerks,  156. 
exceeding  authority,  154. 
limitations  on,  159,  160. 

constructive  notice,  161. 

duty  of  insured  to  learn,  155. 
medical  examiner,  155,  note  21. 
presumptions  as  to,  154. 
secret  instructions  in  derogation  of,  158,  160. 
soliciting  agent,  155. 
special  agent,  155,  note  21. 


INDEX.  515 

[References  are  to  Sections.} 
POWERS  OF  AGENTS— Continued, 
statutory  restrictions,  151. 
to  receive  proofs  of  loss,  312. 
to  waive  conditions,  158,  182,  301. 
against  other  insurance,  183. 
insured  relying  upon,  183. 
to  waive  forfeiture,  158,  note  50,  360. 
to  waive  incumbrances,  258,  note  114. 
to  waive  prepayment  of  premium,  360. 
See  ADJUSTERS;  AGENTS  OF  COMPANIES;  BBOKEBS;  CLERKS  OF  AGENTS. 

PREMIUM  NOTES, 

assessments  on  in  mutual  company,  liability  limited,  133,  note  61. 

in  mutual  company,  payable  absolutely,  negotiable,  133. 

liability  of  maker,  termination,  133. 

limit  of  liability  on,  136. 

not  enforceable  when  policy  void  ab  initio,  135. 

obligation  to  pay,  127. 

not  affected  by  insolvency  of  company,  140. 

outstanding,  right  to  paid-up  policy  without  paying,  132,  note  58. 
part  of  capital  stock,  when,  133. 
payable  on  contingency,  non-negotiable,  133. 

PREMIUMS, 

acceptance  of  as  waiver  of  condition  against  removal,  183. 
acceptance  of  does  not  ratify  unauthorized  act  of  agent  in  issuing 

policy,  166. 

assignee   without   insurable   interest   protected   as   to    money   ad- 
vanced for,  62. 
increase  or  reduction  of  rate,  126. 

custom  or  usage  as  determining,  126. 
in  general,  125. 
nature  of,  126. 
not  a  debt,  when,  127. 
obligation  to  pay,  127. 
payment  a  condition  precedent,  effect,  128. 
rate  of  inserted  in  policy,  126,  207. 
recovery  by  assignee  without  insurable  interest,  67. 
recovery  of,  loan  on  policy  refused,  when,  126,  note  7. 
recovery  of  when  risk  does  not  attach,  126. 
return  of  when  policy  canceled,  299. 
right  of  insured  to  recover,  135. 
unpaid,  insurance  does  not  attach,  126. 

no  recovery  by  mortgagee,  when,  127. 

policy  not  delivered,  effect,  31. 

See  PAYMENT  OF  PREMIUMS. 


516  INDEX. 

[References  are  to  Sections.} 
PRESUMPTIONS, 

against  fact  of  suicide,  burden  of  proof,  371. 

as  to  powers  of  agents,  154. 

of  knowledge  to  establish  waiver,  177. 

of  waiver  from  mere  silence,  179. 

that  agent  is  familiar  with  construction  of  building  insured,  214. 

that  arbitration  is  waived,  319. 

that  award  of  appraisers  is  valid,  322. 

that  company  knows  mercantile  meaning  of  words  used  in  descrip- 
tion, 216. 

that  company  knows  nature  of  stock  and  method  of  doing  business, 
214. 

that  party  accepting  policy  knows  its  contents,  245. 

that  written  application  contains  all  material  representations,  108. 
See  BURDEN  OF  PROOF;  EVIDENCE;  PAROL  EVIDENCE. 

PRINCIPAL  AND  AGENT, 

limitations  on  authority  of  agent,  160. 

See  APPLICATION;  AGENTS;  POWERS  OF  AGENTS. 

PROMISSORY  NOTES, 

acceptance  in  payment  of  premiums,  conditions,  130. 

agent  accepting  and  discounting  and  receipting  for  premium,  130. 

execution  of,  when  not  payment  of  premium,  129. 

given  to  pay  premium,  358. 

of  third  persons,  acceptance  in  payment  of  premiums,  130. 

PROOF, 

of  agency,  153. 

PROOFS    OF   DEATH, 

within  definite  time,  waiver,  180,  note  10. 
PROOFS  OF  LOSS, 

certificate  of  magistrate,  309. 
condition  as  to,  p.  309. 

compliance  with,  what  is,  303,  308. 

not  waived  by  submitting  question  of  amount  to  appraisers,  301. 

waiver  by  soliciting  agent,  155,  note  27. 
condition  precedent,  when,  307. 
failure  to  furnish,  excuses  for,  306. 
fidelity  insurance,  417. 

knowledge  of  company  as  to  falsity  of  assertion,  228. 
misstatements  made  by  mistake,  228. 
objections  to,  specifying  particular  defect,  311. 
plans  and  specifications,  310. 
preliminary,  waiver  by  adjuster,  155. 
requiring,  waiver  of  forfeiture,  181. 

retaining,  does  not  waive  failure  to  give  notice  of  loss,  181,  note  16. 
waiver,  311. 

See  Loss;  NOTICE  OF  Loss. 


INDEX.  517 

[References  are  to  Sections.] 
PRORATING  LOSS, 

condition  as  to,  p.  370. 
construction,  338. 

PROXIMATE  AND  REMOTE  CAUSE, 

application  of  rule  in  fire  insurance  cases,  222. 

See  CAUSE  OF  Loss. 
PUBLIC  POLICY, 

contracts  against,  8. 

insurance  on  lottery  tickets,  55,  note  5. 

Q 

QUESTION  FOR  JURY, 

as  to  increase  of  risk  from  change  of  occupation,  395. 
as  to  materiality  of  facts,  90. 
as  to  materiality  of  representations,  when,  116. 
as  to  materiality  of  statements,  when,  123. 

QUESTION  OF  LAW, 

as  to  insurable  interest,  69. 

as  to  materiality  of  representations,  when,  116. 

as  to  materiality  of  statements,  when,  123. 

E 

RATES, 

change  of  in  assessment  company,  126. 
discrimination  in,  rebates,  126. 
increase  or  reduction,  126. 
inserted  in  policy,  126,  207. 

RATIFICATION, 

of  additional  insurance  by  accepting  benefits,  246. 

REBATES, 

prohibited  by  statute,  126. 

RECEIVER, 

right  to  levy  assessments,  140. 

RECORDS, 

agreement  to  keep,  314. 
in  fireproof  safe,  315. 

waiver  by  general  agent,  301. 
failure  to  produce,  314. 
right  of  company  to  examine,  p.  323. 

RECOVERY  OF  PREMIUMS, 

See  PREMIUMS;  PAYMENT  or  PREMIUMS. 


518  INDEX. 

[.References  are  to  Sections.] 
REFORMATION, 

of  policy,  295. 

wrong  person  named  as  insured,  206. 

REINSTATEMENT, 
conditions,  142. 

other  insurance  taken  for  short  term,  expiration  does  not  reinstate 
original  policy,  245,  note  2. 

REINSURANCE, 
amount,  9. 

condition  as  to,  p.  376. 
contract  not  within  statute  of  frauds,  25. 
is  a  contract  of  indemnity,  18. 
parties  and  their  rights,  340. 
relations  of  parties,  9. 

RELATIONSHIP, 

as  basis  of  insurable  interest,  64. 
"relatives,"  who  included,  352. 

stepfather  is,  and  may  be  beneficiary  of  benefit  certificate,  66. 
statements  as  to  in  application,  378. 

RELIGIOUS  SOCIETY, 

no  insurable  interest  in  life  of  member,  when,  66. 
REMAINDER-MAN, 

insurable  interest,  48. 

REMOVAL  OF  PROPERTY, 

agent  consenting  to,  effect,  183. 
condition  authorizing,  p.  293. 

effect,  218,  219. 
illustrations,  220. 

See  LOCATION  OF  PROPERTY. 
RENEWAL, 

agreement  for  by  soliciting  agent,  155. 
by  clerk  of  agent,  156. 
by  parol,  26. 
condition  as  to,  p.  293. 

construction,  293,  294. 
reformation  of  new  policy,  295. 

RENTS, 

insurance  against  loss  of,  423,  note  51. 

REPAIRS, 

city  authorities  refusing  permission  to  make,   effect  as  to  total 

loss,  235. 

condition  as  to,  construction,  256. 
right  of  insurer  to  make,  p.  353. 
election  to  make,  effect,  327. 


INDEX. 


519 


[References  are  to  Sections,] 
REPRESENTATIONS  AND  WARRANTIES, 

affirmative  and  promissory  representations,  110. 

affirmative  and  promissory  warranties,  illustrative  case,  103. 

agreement  to  keep  a  watchman,  107,  note  23. 

breach  of  warranty,  effect,  104. 

by  broker,  157. 

construction  of,  107. 

statutory  provisions  as  to,  100,  119,  123. 
in  Massachusetts,  120. 
in  Minnesota,  120,  note  73. 
in  Pennsylvania,  121. 
in  Georgia,   Iowa,  Kentucky,   Maine,   Maryland,   Michigan, 

Missouri,  New  Hampshire,  Ohio,  and  Virginia,  122. 
construction  of  statements  in  application,  106. 
continuing  warranties,  110. 
distinguished,  102. 

expectation  or  belief,  statement  of,  109. 
falsity  known  to  agent,  164. 
materiality  of  representations,  tests,  116. 
inquiry  into,  when  precluded,  116. 
opinion  of  experts,  117. 
when  question  for  jury,  116,  117,  123. 
when  question  of  law,  116,  123. 
oral  promissory  representations,  111. 
oral  representations,  108. 
positive  statements,  binding  force,  109. 

presumption  that  written  application  contains  all  material  repre- 
sentations, 108. 

promissory  representations  must  be  in  writing  to  be  available,  112. 
"representation"  defined,  101. 
representations  must  be  substantially  true,  115. 
See  APPLICATION;   CONCEALMENT;   FBAUD;   MISREPRESENTATIONS ; 

WARRANTIES. 
RESCISSION, 

by  insured  for  fraudulent  representations  by  agent,  188. 

RESIDENCE, 

construction  of  condition  as  to,  372. 

REVENUE  STAMPS, 

failure  to  affix  on  policy,  effect,  28. 

RIDERS, 

use  of,  202. 

RISK, 

assumption  of  necessary  to  collection  of  premium,  135. 
not  attaching,  recovery  of  premium,  126. 


520  INDEX. 

[References  are  to  Sections.] 
RISK — Continued, 

description  of,  knowledge  of  agent,  188. 
description  of  interest,  70. 

effect  on  rate  of  premium  as  determining  materiality,  253. 
essential  to  contract  of  insurance,  14. 
interest  in  an  illegal  business,  14. 
must  be  incurred  before  contract  binding,  16. 
what  may  be  subject-matter  of  insurance,  14. 
See  CONTBACT  OF  INSURANCE;    EXCLUDED  RISKS;    PROHIBITED  ARTICLES; 

SUBJECT-MATTER  OF  INSURANCE. 
RISKS  OF  TRAVEL, 

See  ACCIDENT  INSURANCE. 

RUNNING  OVER  HOURS, 

See  NIGHT- WORK. 

s 

SISTER, 

See  BROTHER  AND  SISTER. 
SMOKE  DAMAGE, 

resulting  from  defective  stovepipe,  221. 

See  CAUSE  OF  Loss. 
SON, 

See  PARENT  AND  CHILD. 
SON-IN-LAW, 

no  insurable  interest  in  life  of  dependent  mother-in-law,  66. 
SPECIAL  PRIVILEGES, 

condition  as  to,  p.  411. 
SPECIFIC  PERFORMANCE, 

of  oral  agreement,  27,  29. 
STABLE, 

when  included  in  term  "dwelling  house,"  217. 

See  CONSTRUCTION  OF  POLICY;  WORDS  AND  PHBASES. 

STANDARD  POLICY, 
amount,  209. 

application  a  part  of  the  policy,  224. 
arbitration, 

award,  invalidity,  322. 
resubmission,  324. 

condition  precedent,  320. 

demand  for,  319. 

as  admission  of  liability,  325. 

disagreement,  316. 

in  case  of  total  loss,  318. 


INDEX.  5JJ1 

[References  are  to  Sections.] 
STANDARD  POLICY— Continued, 

revocation  of  condition,  321. 

right  of  mortgagee,  326. 

validity  of  provision,  317. 

waiver  of  right,  323. 
assignment  of  policy,  282. 
authorization  of  agent,  223. 
binding  clause,  203. 
breach  of  condition,  effect,  205. 
cancellation  of  policy, 

authority  of  agent  to  cancel,  298. 

in  general,  296. 

return  of  premium,  299. 

time  of,  297. 

what  constitutes,  300. 
change  in  interest,  title,  or  possession, 

assignment  and  bankruptcy  proceedings,  278. 

change  of  possession,  280. 

conveyance  to  wife  of  insured,  272. 

defeasible  conveyances,  269. 

executory  contract  of  sale,  267. 

incumbrances,  268. 

invalid  conveyances,  270. 

judgment,  276. 

lease  of  property,  281. 

legal  process  or  judgment,  275. 

partition,  277. 

sale  with  purchase-money  mortgage,  271. 

scope  of  provision,  265. 

transfer  by  death,  279. 

transfer  of  part  interest,  266. 

transfers  by  and  between  partners,  273. 

between  joint  owners,  274. 

conditions  affecting  mortgagees,  special  provisions,  341. 
construction  of  terms,  204,  342. 
description  of  buildings,  217. 

of  merchandise,  216. 

of  property,  in  general,  210. 

ambiguous,  reformation,  213. 
descriptions,  when  warranties,  215. 
excluded  property,  exceptions  and  limitations,  236. 

plate  glass,  frescoes  and  decorations,  237. 
excluded  risks, 

city  ordinances,  235. 

explosions,  232. 

fall  of  building,  234. 

invasion,  riot,  etc.,  229. 


522  INDEX. 

[References  are  to  Sections.'] 
STANDARD  POLICY— Continued, 
lightning,  233. 

neglect  to  protect  property,  231. 
theft,  230. 

exhibition  of  property  and  records,  examination  of  party,  313. 
failure  to  produce  books,  314. 
iron  safe  clause,  315. 
goods  held  in  trust,  211. 
in  general,  200,  302. 
interest  in  and  care  of  property, 
building  on  leased  ground,  261. 
changes  in  adjoining  property,  254. 
"different  interests,"  definition,  246. 
foreclosure  proceedings,  263. 
generation  of  illuminating  gas,  264. 
increase  of  risk,  effect,  255. 
Incumbrances,  258. 
illustrations,  259. 

breach  of  condition,  illustrations,  260. 
chattel  mortgage,  262. 

operation  of  manufacturing  establishment,  251 
running  over  hours,  252. 
increase  of  risk,  253. 
other  insurance,  245. 

consent  of  company,  waiver,  249. 
"whether  valid  or  invalid,"  construction,  247. 
where  words  do  not  appear,  248. 
ownership,  257. 

policy  covering  part  of  property,  250. 
repairs,  employment  of  mechanics,  256. 
location  of  property,  in  general,  218. 
authorized  change  of,  292. 
is  material,  219. 

illustrations,  220. 
measure  of  damages, 
illustrations,  337. 
in  general,  332. 
total  loss,  meaning,  335. 

total  loss  to  frame  buildings  within  fire  limits,  336. 
valued  policy  legislation,  333. 
constitutionality  of,  334. 
misconduct  of  insured  in  procuring, 

concealment  and  misrepresentation,  226. 
entirety  of  contract,  225. 
fraud  and  false  swearing,  228. 
statement  of  interest,  227. 
Massachusetts  form,  where  used,  201. 


INDEX.  523 

[References  are  to  Sections.] 
STANDARD  POLICY— Continued, 
mutual  companies,  342. 
New  York  form,  where  used,  202. 
notice  and  proof  of  loss, 

certificate  of  magistrate,  309.  • 

compliance,  303. 

what  is,  303,  308. 

condition  precedent,  when,  307. 

definition,  303. 

failure  to  furnish  proofs,  excuses,  306. 

"immediate"  notice,  304. 

plans  and  specifications,  310. 

separation  of  goods  "forthwith,"  305. 

to  whom  notice  must  be  given,  312. 

waiver,  311. 

other  conditions,  indorsement,  p.  381. 
parties,  206. 
premium,  207. 
prescribed  by  statute,  24. 
presumption  as  to  nature  of  business,  214. 
prohibited  articles, 

kerosene,  exception  in  favor  of,  285. 

use  of  property,  prohibited  articles,  283,  284. 
prorating  loss,  338. 

proximate  cause  of  loss,  electric  wires,  222. 
reinsurance,  340. 
renewal  of  contract, 

in  general,  293. 

illustrations,  294. 

reformation  of  policy,  295. 

right  to  repair,  rebuild,  or  replace,  option  reserved,  327. 
risks  insured  against,  221. 
shifting  stock,  may  cover,  212. 
subrogation,  339. 
term  of  insurance,  208. 
time  of  bringing  suit, 

limitation  begins  to  run  when,  330. 

validity  of  condition,  329. 
time  within  which  loss  is  payable,  328. 
vacancy, 

building,  contents,  vacancy,  290. 

condition  as  to,  p.  285. 
construction  of,  287. 
illustrations,  291. 
when  applied  to  dwelling  house,  289. 

in  general,  286. 

"vacant"  and  "unoccupied"  not  synonymous,  2! 
waiver,  limitations  upon  power  of,  301. 


524  INDEX. 

[References  are  to  Sections.! 
STATE  CONTROL, 

of  insurance  companies  and  agents,  12,  151. 

STATUTE  OF  FRAUDS, 

contract  of  insurance  not  within,  25. 

STATUTE  OF  LIMITATIONS, 

application  in  insurance  contracts,  329. 

STATUTES, 

abolishing  distinction  between  general  and  special  agents,  154. 
fixing  amount  of  assessments,  137. 
forbidding  discrimination  in  rates,  126. 

providing  rules  of  construction  for  representations  and  warranties, 
constitutionality,  119. 

controlling  force,  123. 
relating  to  insurance  agents,  151. 

construction  of,  152. 

repeal  of,  enforcement  of  conditions  in  contract,  134. 
requiring  notice  of  maturity  of  premiums,  134. 
violation  of  by  company  no  defense  in  action  on  policy,  12. 

STEPFATHER, 

is  a  "relative,"  and  may  be  beneficiary  of  benefit  certificate,  66. 
STEPSON, 

no  insurable  interest  in  life  of  stepfather,  66. 
STOCKHOLDERS, 

corporation  no  insurable  interest  in  life  of,  66. 

SUB-AGENTS, 

See  CLERKS  OF  AGENTS. 

SUBJECT-MATTER  OF  INSURANCE, 

description  of  merchandise,  what  included,  216. 

interest  necessary,  wager  policy  prohibited,  30. 

interest  of  person  named  in  policy,  206. 

mistake  of  agent  in  describing,  187. 

plate  glass,  frescoes  and  decorations,  237. 

presumption  as  to  company's  knowledge  of,  214. 

value  need  not  be  proved  under  valued  policy,  30. 

what  may  be,  8,  14,  40. 
See   CONTRACT   OF   INSURANCE;    EXCLUDED   RISKS;    EXCLUDED   PROPERTY; 

PROHIBITED  ARTICLES;  RISK. 
SUBROGATION, 

condition  as  to,  p.  372. 

general  principles,  339. 

of  insurer  to  rights  of  mortgagee,  341. 

when  allowed,  and  measure  of  insurer's  rights,  21. 


INDEX.  525 

[References  are  to  Sections.} 
SUICIDE, 

construction  of  condition,  370. 

no  provision  against,  effect,  369. 

of  insured,  beneficiary  how  affected,  369. 

presumption  against,  burden  of  proof,  371. 

sane  or  insane,  368. 

See  LIFE  INSURANCE  POLICY. 
SUNDAY  LAW, 

insured  injured  while  violating,  401. 

SUNSTROKE, 

is  a  disease,  392,  399. 
exception,  392. 

SURETIES, 

liability  on  agent's  bond,  166,  note  90. 

on  distiller's  bond,  insurable  interest  in  whisky,  48. 

SURRENDER  VALUE, 

paying  to  trustee  for  benefit  of  creditors,  357. 

SUSPENSION, 

during  absence  of  property  from  place  insured  at,  219. 

illustrations,  220. 
during  breach  of  condition,  205. 
from  membership,  death  or  loss  during,  ^141. 
for  non-payment  of  assessments,  138. 

application  of  dividends,  138. 
for  non-payment  of  note,  130. 
for  non-payment  of  premium,  128. 
of  contract  by  alienation  of  interest,  46. 

by  operation  of  war,  128. 
of  work  in  manufacturing  establishment  temporarily,  251. 

T 

TENANT  BY  CURTESY, 

insurable  interest,  48. 

TENANTS  IN  COMMON, 

insurable  interest,  48. 

TENDER, 

of  unearned  premium,  when  not  sufficient  to  cancel  policy,  299. 

THEFT, 

insurance  against,  423,  note  51. 
liability  for,  230. 


526  INDEX. 

{References  are  to  Sections.] 
TIME  OF  PAYMENT, 

date  of  maturity  of  premiums  reckoned  from,  129. 
See  COMPUTATION  OF  TIME. 

TIME  POLICY, 
defined,  30. 

TITLE  AND  OWNERSHIP, 

applicant  stating  that  he  is  the  "owner,"  construction,  227. 
condition  as  to,  257. 

illustrations  of  compliance  with,  259. 

of  breach,  260. 

condition  against  building  on  leased  ground,  261. 
condition  of,  notice  to  clerk  of  agent,  156. 
description  of  in  policy,  70. 
knowledge  of  agent  as  to  state  of,  188. 
nature  of  to  be  disclosed,  when,  257. 
quality  of,  how  affected  by  incumbrances,  258. 
what  is  sufficient  title,  257. 
who  is  sole  and  unconditional  owner,  illustrations,  259. 

who  is  not,  illustrations,  260. 

See  APPLICATION;   CONSTRUCTION  OF  CONDITIONS;   INCUMBRANCES;   INSUB- 
ABLE  INTEREST;  OWNER. 

TITLE  INSURANCE, 

construction  of  policy,  423. 

TOTAL  DISABILITY, 
what  is,  403. 

TOTAL  LOSS, 

arbitration  and  appraisement,  318. 

under  valued  policy,  318. 
damage  to  foundation  not  considered,  335. 
frame  building  within  fire  limits,  235,  336. 
insurer  electing  to  rebuild,  327. 

effect  of  valued  policy,  327. 
meaning,  335. 

recovery  under  valued  policy,  209,  333. 
See  Loss. 

TRADE, 

contract  in  restraint  of,  8. 

TRUSTS, 

beneficiary  without  interest,  Texas  rule,  62. 
insurable  interest  of  trustee  and  cestui  que  trust,  48. 


INDEX.  527 

[References  are  to  Sections.} 

U 
USAGE, 

as  controlling  materiality  of  location,  219. 

as  determining  rate,  126. 

as  to  giving  notice  of  maturity  of  premiums,  134. 

testimony  of  insurance  expert  as  to,  on  question  of  materiality,  117. 

USE  OF  PREMISES, 

breach  of  condition  as  to,  205,  notes  15,  16. 
change  in,  alterations  by  mechanics,  effect,  256. 
description  of,  when  a  warranty,  215. 
prohibited  articles,  283,  284. 

exception  in  favor  of  kerosene  oil,  285. 

See   EXCLUDED  PROPERTY;    EXCLUDED  RISKS;    INCREASE  OF  RISK;    OCCU- 
PANCY; PROHIBITED  ARTICLES;  VACANCY. 


V 

VACANCY, 

condition  against,  p.  285. 

breach  of,  205,  notes  15,  16. 
construction  of,  287. 
illustrations,  291. 
in  case  of  a  dwelling  house,  289. 
in  case  of  building  and  contents,  290. 
effect  on  rate  of  premium,  expert  evidence,  255. 
increased  danger  of  fire  from,  expert  evidence,  255. 
temporary,  effect,  286. 

"vacant"  and  "unoccupied"  distinguished,  288. 
what  Is,  287. 

See  OCCUPANCY. 

VALUE, 

at  date  of  loss,  measure  of  damage,  337. 

false  statement  as  to,  effect,  228. 

proof  unnecessary  under  valued  policy,  30. 

stated  in  application,  company  not  bound  by,  337. 

See  CERTIFICATE  OF  Loss;  MEASURE  OF  DAMAGES. 

VALUED  POLICY, 

defined,  30. 

insurer's  right  to  rebuild  under,  327. 

legislative  provisions,  333. 

constitutionality  of,  334. 
measure  of  damages,  209. 
overvaluation,  effect,  228,  333. 


528  INDEX. 

{.References  are  to  Sections.] 
VALUED  POLICY— Continued, 

submitting  amount  of  loss  to  arbitration  not  a  waiver  of  statutory 

benefits,  318,  note  119. 
total  loss,  arbitration  and  appraisement,  318. 

measure  of  damages,  333. 
where  in  force,  333. 

VENDOR  AND  VENDEE, 

insurable  interest,  48. 
VENDOR'S  LIEN, 

for  purchase  money,  effect  on  quality  of  title,  258. 

See  ALIENATION;  INCUMBBANCES ;  TITLE  AND  OWNERSHIP. 

VOID  OR  VOIDABLE, 

condition  broken  as  to  other  insurance,  245. 
VOYAGE  POLICY, 

defined,  30. 

w 

WAGER  CONTRACT, 

form  of  policy  not  allowed  to  cover  and  protect,  59. 
WAGER  POLICY, 

defined,  30. 

prohibited,  30. 

WAIVER, 

basis  of,  178. 

company  estopped  to  assert,  when,  185. 

condition  as  to,  p.  305. 

definition,  143,  note  98,  175,  176. 

factory  running  over  hours,  issuing  policy  with  knowledge,  252. 

in  writing  only,  construction  of  condition,  185. 

knowledge  and  intent  essential,  177. 

limitations  upon  power  of,  301. 

not  inferred  from  mere  silence,  179. 

of  condition  against  other  insurance,  249. 

of  condition  against  removing  stock,  183. 

of   condition   requiring   certificate    of   nearest   notary    public,    180, 

note  10. 

of  conditions  by  president  and  secretary,  provision  against,  163. 
of  conditions  in  policy,  180. 

evidence  to  show,  159. 

power  of  agents,  182. 
of  defenses,  181. 
of  failure  to  give  notice  of  loss,  when  not,  181,  note  16. 


INDEX.  529 

[References  are  to  Sections. J 
WAIVER— Continued, 
of  forfeiture,  205. 

affirmative  action  to  deny,  205. 

effect  on  policy,  176,  note  2. 

parol  evidence  to  show,  189. 

for  breach  of  condition  by  agent,  158,  note  50. 

for  removal  of  property,  219. 
of  fraud,  68. 

of  imperfection  in  answer  to  inquiry,  87. 
of  incumbrances  by  agent,  258. 
of  iron  safe  clause  by  general  agent,  301. 
of  limitations  as  to  time  of  bringing  suit,  359. 
of  notice  of  assignment  of  policy,  363,  note  94. 
of  prepayment  of  premium,  130,  358. 

by  agent,  159,  184,  359. 

by  clerk  of  agent,  156. 

by  general  agent,  129. 
of  proofs  of  loss,  what  is,  311. 

of  provision  in  policy  by  oral  agreement  to  renew,  26. 
of  right  to  arbitrate,  what  is,  323. 

to  second  arbitration,  324. 

to  forfeiture,  implied,  128. 

to  rebuild,  180,  note  10. 
of  time  of  payment  of  assessments,  143. 

of  premiums,  128. 
presumption  of  knowledge,  177. 

See  ACCEPTANCE;  ESTOPPEL. 
WAR, 

suspension  of  contract  by,  128. 

WAREHOUSEMEN, 

insurable  interest,  47. 

WARRANTIES, 

application  and  survey,  in  standard  policy,  224. 

are  conditions  in  the  policy,  79. 

as  to  space  between  buildings,  knowledge  of  agent,  188. 

condition  precedent,  118. 

not  in  Minnesota,  burden  of  proof  as  to  falsity,  118. 
defined,  102. 

descriptions  construed  as,  when,  215. 
incorrectly  written  by  agent,  188,  note  40. 

oral  evidence  to  show  incorrectness,  189. 
irresponsive  answers  are  not,  88. 
mistake,  good  faith  answer,  108a. 
not  created  by  implication,  106. 
34 — ELLIOTT  INS. 


530  INDEX. 

[References  are  to  Sections.] 
WARRANTIES — Continued, 

not  favored  in  law,  107,  note  23. 
overvaluation  as  a  breach  of,  228. 
statements  in  application  as,  367a. 
See  CONCEALMENT;  FRAUD;  MISREPRESENTATIONS;  MISTAKE;  RKFRESENTA- 

TIONS  AND  WARRANTIES. 
WATCHMAN, 

employment  of  while  factory  idle,  251. 
WATER  DAMAGE, 

resulting  from  fire,  policy  covers,  221. 

See  CAUSE  OF  Loss. 

WEARING  APPAREL, 

when  covered  by  policy,  220. 
WILL, 

power  to  change  beneficiary  in,  354. 
in  mutual  company,  356. 

WORDS  AND  PHRASES, 

"any  use  or  custom  of  trade  or  manufacture  to  the  contrary,"  283. 

"apparent  or  ostensible  authority,"  158. 

"as  his  interest  may  appear,"  259. 

"bodily  infirmity,"  399. 

"brick  building,"  215. 

"cease  to  be  operated,"  251. 

"children,"  policy  payable  to,  352. 

"date  of  notice,"  134,  note  66. 

"dependent,"  66,  352. 

"direct  loss  or  damage  by  fire,"  221,  222. 

"disease,"  399. 

"dwelling,"  construed  as  description,  not  warranty,  215. 

"forthwith,"  separation  of  goods,  305. 

"good  health,"  375. 

"grain,"  216. 

"guano,"  216. 

"heirs,"  352. 

"household  furniture,"  216. 

"immediate"  notice,  304. 

"insurable  interest,"  42,  57. 

"insurance,"  6. 

"insurance  agent,"  150. 

"insured,"  p.  381. 

"interest"  broader  than  title,  227. 

"live  stock,"  216. 

"loss,"  p.  381. 

"machinery,"  216.  . 


INDEX.  1 

[References  are  to  Sections.] 
WORDS  AND  PHRASES— Continued, 
"material  fact,"  90. 
'"merchandise,"  216. 
"plate,"  236. 

premium  "to  be  paid  in  advance  to  the  company,"  129. 
"rags  and  old  metals,"  216. 
"relatives,"  who  included,  352. 

includes  stepfather,  66. 
"self-destruction  in  any  form,"  394,  note  38. 
"serious  illness,"  375. 
"stock  in  trade,"  216. 
"storage,"  236. 

"store"  construed  as  shop,  217. 
"store  fixtures,"  236. 
"storehouse,"  215. 
"tools,"  216. 
"total  disability,"  403. 
"total  loss,"  335. 

"true"  and  "untrue"  answers,  108a. 
"vacant  or  unoccupied,"  meaning,  288. 
"valid  or  invalid,"  other  insurance,  247,  248. 
"void"  construed  as  voidable,  203. 
"voluntary  exposure  to  unnecessary  danger,"  398. 

See  CONSTRUCTION  OF  POLICY;  DEFINITIONS. 


Whole  number  of  pages,  587. 


LAW  LIBRARY 

UNIVERSITY  OF  CALIFORNIA 
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